I am working on a project with 5 people and we recently switched from SVN to TFS. The entire process has been a nightmare. We have auto generated code from XMLSpy, and TFS does not recognize files modified outside of VS2008. The TFS Power Tools can scan your checkout and fix this problem but it is a pain to have to remember to use these tools. Another problem we constantly run into is the default merging tool in TFS. It is by far the worst merging tool I have ever used. One would think that TFS would be able to handle basic solution merges but so far that has not been the case.
The built in user interface is very useful, but it also has flaws. If I checkout from my solution explorer, sometimes files are that have been added are not checked out. If I do it from the Team Source Control window it works perfectly. Why is that? I look forward to TFS in VS2010 as I have heard great things about it, and SVN is far from perfect, but I would have expected some of these features to function a little more intuitively.
Adam