As many of you may already know, the SQL Azure July 2011 Service Release increased the database engine version of SQL Azure from 10 to 11 which caused many applications to stop working as soon as this update was applied to the data center they were running in. Sitefinity was also affected which was addressed by a hotfix as described in the following KB article. Even Microsoft’s SQL Server Management Studio and SQL Server Management Objects (SMO) were affected and had to be updated as described in the announcement of the service release or if you have SQL Server 2008 R2 installed you can apply the SQL Server 2008 R2 Service Pack 1 (or the one for the Express Edition). Also note that the SQL Azure Migration Wizard that is used in Sitefinity’s deployment process needs the SMO to be updated.
So in short, you either need to apply the aforementioned Sitefinity 4.2 hotfix or use the upcoming 4.2 SP1 and you have to upgrade at least your SMO to make the SQL Azure Migration Wizard work. We recommend upgrading your SQL Server and Management Studio as well.
The next update from Microsoft is the September 2011 versions of the Windows Azure SDK and Windows Azure Tools for Microsoft Visual Studio (version 1.5). It introduced some cool new features, like the long expected database export to blob storage and changed the UI of the Visual Studio tools. (The adjustment of Sitefinity’s documentation is underway.) The SQL Azure upgrade doesn't break Sitefinity or its deployment process and we are still able to deploy and run Sitefinity with the 1.4 version. So while we recommend getting the new SDK and tools for VS, it’s not a “MUST”.
As always, any feedback is welcome and appreciated.