The examples' projects are manually modified by us to allow them to work on our development machines, our test servers, the online demos and the client machines. I suppose those changes prevent Visual Studio to properly upgrade them from Silverlight 2 to Silverlight 3. We do not provide native Silverlight 3 example projects, but we will do in the near future. At the moment you could just copy and paste the code from our Silverlight 2 examples in your Silverlight 3 project, instead of opening our example projects.
the Telerik team