Gary, I just upgraded to Lion and all went well. My Time Machine (using a Time Capsule wirelessly) has started a backup. I am assuming it will take while.
Is this similar to the first backup when I set up the Time Machine (many hours)?
For your info, I used the USB from Apple for the upgrade. It went exactly as expected. Simple to use the USB, follow the menus and voila! It is done. I had previously made sure I had a Time Machine backup, had checked for any software upgrades and shut down all Apps.
The only real worry I had was when the USB arrived, it was packed with a set of iHome speakers which had a clearly stated warning to keep the speakers away from electronic devices….and the USB was just in a bubble pack in the same box. No problem as far as I can tell. It installed without a hitch.
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Michael Wheless
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Time Capsule Backup duration after upgrade to Lion OS
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It is similar to when you create an initial backup. An initial backup needs to backup everything -- a large portion of which is OS X itself. Now that you have upgraded from Snow Leopard to Lion, it has to back up all of those Lion files the first time. So a huge portion of your drive is being backup up for the first time, and last time for at least a while.