I recently upgraded to iPhoto 4, part of the new iLife 04 package, and I'm not impressed. It looks like others have been having problems too. If you are going to be trying out iPhoto 4, be sure to back up your old photo library folder before making the move, so you can downgrade if you have problems.
First, it seems to be confused about your old "albums", trying to recover the alias files that were in your albums folders, resulting in tons of "recovered" photos that are completely bogus. It looks like a workaround is to remove your "Albums" folder from your library before launching iPhoto 4 for the first time. This prevents iPhoto 4 from trying to process these files.
Second, it looks like a bunch of files never get their previews generated, so I see dozens or hundreds of the photo previews as blank squares. Something is not triggering iPhoto to generate the preview icons for these.
I'll be happy to report this as a bug to Apple, but if anybody has any insight on these problems, let me know first...