If I were you I'd do a clean install. It's simpler in the long run.
I've also had a problem with hanging on bootup. After I enter my password the login application hangs before running the Finder. The login progress bar moves, but it never dissapears. I've left it running like that for 30-40 minutes and it never finishes booting up. I have a PowerBook (Pismo) and installed 10.1 from the retail CD on a newly formatted HD.
I did notice that the menu bar icons appear (but no menu), so since I had the scripting extensions installed I was able to access the Finder Scripts --> Switch to Finder. This brought up the Finder, but it was still in the background behind the stalled login app. Restarting the finder did nothing, but on repeated attempts to logout and login (which I could now access from the Finder Menu) finally succeded. Clearly, 10.1 still has some bugs related to bootup.
Is anyone else having problems booting up or logging in?