Upgrading from FC1 to FC2 using yum - a few suggestions:

There are certain things only anaconda can do. There is no other way
around it. If you're using LVM stop reading and know that you must use
anaconda to do this upgrade.

In general, if you're not cramped for space/time/something you should use
anaconda to upgrade. You'll find you come out with a much more reliable upgrade 
process and much less pain. However, if you'd like to try to upgrade the whole
system via yum you should follow these instructions.

Before you start it would be a good idea to do the following:
- BACKUP YOUR DATA
- run rpm -q kernel kernel-smp
  compare the results to the kernel you are running (uname -r).
  run 'rpm -e' for each of the kernels that you are not using
   ex:
    rpm -e kernel-2.4.22-1.2115.nptl kernel-smp-2.4.22-1.2115.nptl
 
  Do the same with kernel-source packages.
   ex:
     rpm -e kernel-source-2.4.22-1.2174.nptl
 
   This will make things a lot easier on you, trust me, and it frees up a HUGE 
   amount of disk space.

- run: yum clean all
   That will get rid of built up crap in /var/cache/yum

- run mv /etc/modprobe.conf /etc/modprobe.anacbak
    - this is something anaconda would normally do to fix a problem in the
      modprobe's generated in FC1.
      
- Edit your /etc/yum.conf and remove all repositories except for the new FC2 
  repositories. Remember to use mirrors not just the download.fedora.redhat.com
  main site.

- You'll want to exit X (if you're running it on the machine you're upgrading)

- Press ctrl-alt-f1 to get the to text console.

- Login as root.

[OPTIONAL]
   Another option for upgrading is this:
   run: 
    yum upgrade yum python rpm-python rpm glibc glibc-common \ 
                redhat-config-\* XFree86\* libxml2\*
                
   This will upgrade a number of critical packages first and helps create a 
   safe(r) environment for yum to upgrade.
   
   After this finishes continue with the rest of the instructions.
[END OPTIONAL] 

- run: yum upgrade
  wait for it to either resolve your deps or tell you that some misc package
  you installed can't be sorted out under FC2. :)

   If the latter occurs look for where you got that program from and see if 
   you can either:
    1. add their FC2 repository to your yum.conf or
    2. remove the package and try again.
 
   If it the former occurs, press 'y' and hit enter.

- Then wait for the upgrade to continue.

If yum appears to stall out after:
Test transaction complete, Success!

That is due to a test run for diskspace. It is doing things here but 
nothing that reports in any meaningful way until it is done. Sorry about 
that. It's something I intend to correct.

After the upgrade completes you may find yum exits unhappily when it goes to 
make the new kernel the system default. Don't worry about this - it's not a
big deal. It may or may not happen depending on how your system was patched, 
or not, as the case may be.

After you've finished the upgrade you should run:
     /usr/sbin/fix-mouse-psaux
to update the system for the 2.6 kernel input layer.

Reboot your system, make sure the 2.6 kernel is selected from grub when your
system boots. If it isn't you should edit your /etc/grub.conf and change the
default= to point to this kernel(typically default=0)

Hope this helps, if you encounter tracebacks file them at bugzilla.redhat.com
and I'll take a look.