I've just finished the first round of VMware Server 2.0 beta testing, and although I quite like the product, it's still not stable enough for my needs, and so I've decided to fall back to VMware Server 1.0.4.
But what happens is that every time you try to use the VMware Server 2.0 virtual machine in VMware Server 1.0.4, you get an error like this:
"Configuration file was created by a VMware product with more features than this version" may be a correct statement, but chances are that you won't need any of the new features of VMware Server 2.0 to use standard VMs.
Because of this, you can use a simple hack to make the new VMs work with older version of VMware Server: simply change the hardware version back.