Performing an In-Place Upgrade of a SharePoint Environment
The most straightforward path from SharePoint 2007 to SharePoint 2010 is to choose the in-place upgrade approach. This approach is typically used on small to mid-sized SharePoint deployments, because it involves an immediate upgrade of all site collections to SharePoint 2010, using the existing databases.
As previously mentioned, the main advantage to this migration approach is the simplicity of it and the fact that it preserves farm settings, such as Audiences. However, it is also the riskiest approach because it requires a full commitment to the upgrade process and, if it fails, the only way to recover is from backup.
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