I also did an experiment upgrading from Scala 2.9.2 to 2.10.0-M3, with no success. Lots of spurious compilation problems, and we're not alone having them based on forum postings.

So this upgrade has to wait for a more stable version.

The process is pretty simple:

Upgrading from sbt is easy: just change the scala version in the build.sbt file.
Then sbt clean update-classifiers. It is probably worth it to blow away the ivy cache (~/.ivy2). It takes quite a bit of time to download all the libraries over the web. Perhaps 15 minutes on my comcast 1.5Mbit/sec service.

Upgrading eclipse is also easy. New update site, and the usual thing.