I just did my upgrade yesterday and the database part of it was easy. The attach/detach went off without a hitch, there were no compatibility issues. The Migration Tool worked well too. While it had the backed up database (and I think it even upgraded it too) ready to go, choosing an existing DSN prevented it from restoring it.
I did make sure the permissions on the database were correct so vCenter could upgrade and use it. This is done throught the SQL Server Management Studio. The defaults may work for you.
One problem I did have was getting the 32 bit DSN set up for the Upgrade Manager database. Be sure to run C:\windows\syswow64\odbcad32.exe to create a 32 bit DSN just like you did for the vCenter database. (Don't be alarmed, it can't show existing 64 bit DSNs.) I did this during the Migration Tool install for Update Manager because I didn't get the 32 bit DSN created properly the first time. The installer could not find the 32 bit DSN after I created it (prompting several attempts to get it right) via the dropdown box. With nothing left to try, I typed the name of the DSN in the box and it took it.
Another thing to look out for is that SQL Agent needs to be running for the installer to create the jobs needed to maintain the data. It warns you when it needs it, but I initially thought it was a DSN error. Agent is set to Manual by default in the Services control panel. I switched it to Automatic and started it and the install proceeded.
When using the Migration tool, it will ask you if you want to copy the downloaded patches for Update Manager. Skip that. I had 6GB worth of unneeded patches. Update Manager will redownload anything it needs.
Everything is good now except for one thing. 4.1 has made a mess of HA for me, it no longer configures. But that is out of the scope of this thread.