I've upgraded to the latest WordPress, release 2.1
Hopefully everything works as before.
Funnily, the biggest new thing (besides 'boring' security fixes) advertized with 2.1 is a new visual editor for posts. But to my surprise I found it was not enabled by default! In the admin panel you need to go Users/Your Profile and check the "Use the visual editor when writing" tickbox to get the new and improved editor.
There's also a new spell-checker, but for me it errors out with a cryptic message "Could not execute AJAX call, server didn't return valid a XML."
For some reason I also needed to replace my <code>.htaccess</code> file for everything to work.
Update: I'm still finding it quite annoying that WordPress creates posts with no ALT tag when I insert images and don't bother to include some text in the ALT field. This results in errors when doing XHTML validation. So I've filed a WordPress bug report. Let's see what happens!