Its possible to configure Virtual Directories for separate versions of ASP.NET. If you are using database for storing a session, then you should not have any issues with the session as well.
The web.config can be the same if you have it at a root level above both virtual directories but I think the xml scheme for web.config for v2.0 has undergone some changes so maybe better to have that separate.
However, read the Go Live license carefully and decide if you want to make the move. The .NET Framework 2.0 is expected to reach RTM on Nov 7th 2005.
Regards,
Vikram