According to the release notes Update 1 includes the following improvements:

• Support for Windows 7 and Windows Server 2008 R2;
• Support for View 4;
• Support for 160 VMs per host in a HA cluster with 8 hosts or less;
• Increased vCPUs per core limit from 20 to 25;
• Paravirtualized SCSI support has been extended to Windows 2003 and 2008 boot drives;
• vDS performance improvements;
• Support for DB2 database;
• Improved support for Microsoft Clustering.

Besides this vCenter server now includes a pre-upgrade checker tool which enables you to proactively check ESX hosts for any potential issues that you might encounter while upgrading vCenter agents on these hosts as part of the vCenter Server upgrade process. You can run this tool independently prior to upgrading an existing vCenter Server instance. The tool can help identify any configuration, networking, disk space or other ESX host-related issues that could prevent ESX hosts from being managed by vCenter Server after a successful vCenter Server upgrade.

Source: http://www.vmguru.nl/wordpress/2009/11/vsphere-4-update-1-released/