What is the proper way to upgrade a project from depending on .NET Framework v1.0 to v1.1? I just installed 1.1 (thanks Lunatic3) and I see that it is installed, but when I look at existing projects in their Solution Explorer -> Dependencies all the builtin stuff points to:
C:\WINNT\Microsoft.NET\Framework\v1.0.3705\System.dll

What should I do? Make a new project and add the files individually? Or is there an updating tool?

actually newly created projects seem to be looking at version 1.0 as well...