sfrrr is right, this is essentially an alpha release in computer industry parlance, in fact if more people knew what an alpha was we probably would have called it that. As is 'beta' seemed like a better bet, 'alpha' might ironically have inspired more people to install / be frustrated by this first release since they wouldn't necessarily understand what alpha meant.
So yes, stability is indeed the top priority, and right up with that is getting the most essential dictionary functionality (i.e., search and input) working correctly. The question is what else to work on beyond that, and it seems like as far as non-dictionary-related stuff, flashcards are definitely getting the most support. Beta 2 most definitely will not have a 1.0-to-2.0 converter, though, and the format likely still won't be stabilized yet either, so as far as migrating to 2.0's flashcards you're not going to be able to do that until Beta 3 at least, which I imagine lessens some people's enthusiasm for that feature.
Is anyone else besides sfrrr experiencing problems with audio on Pocket PC? We're still not very clear on that bug... (this question should probably be put in one of the bug-reporting threads)
Since the Palm OS ARM speed optimizations are probably the biggest potential source of new issues among the things we haven't implemented yet, those are one of the things we're going to work on first; we really want to make sure that code is nice and stable and has been out for a while before the finished release. Pocket PC font optimization is right up there too; we actually have an HTC Hermes on order so once that arrives we'll definitely be taking a look at that problem. So hopefully in Beta 2 we'll have fixed the two big speed issues, gotten search / input to be nice and stable, and cleaned up flashcards at least enough so that you could for example add a few hundred single-character words and start pounding away on stroke order, or add the first level or two of HSK and pound away on your Pinyin tones, even if you're not yet able to switch over to 2.0 flashcards exclusively.