The biggest headache users face before upgrading to a newer version of WordPress, is whether or not all their plugins will work with the new WordPress version.
I have seen lot of people delaying upgrading to a newer version because of this reason, the WordPress Codex does maintain a list of plugins that are compatible with different versions of WordPress, WordPress Plugin Compatibility Checker is a informational service which indexes plugins and provides compatibility checks.
This tool does provide with a way to check whether a plugin follows different things to determine compatibility, however use it only for informational purposes rather than using it as a tool to base your decision on upgrading WordPress, the WordPress codex for plugin compatibility document is definitely the best way to go.
The plugin compatibility checker currently indexes more than 7500 plugins, out of which 5040 plugins are fully compatible with WordPress 2.8.
There are several criteria’s used while determining if a plugin is compatible or not, some of which include minimum and maximum WordPress versions, whether the plugin is using hardcoded values of wp-content, whether the plugin is compatible with PHP4, whether it is directly connecting to the database without making use of the DB object provided by WordPress among other things.
If you are a plugin developer, you can use this tool to see if there are any problems with the plugin.
This tool will definitely come in handy whenever you want to make a decision to upgrade to a newer version of WordPress. The compatibility results provided by this tool may not be exactly accurate, it should only be used for informational purposes, the plugin compatibility list provided by WordPress Codex is the best way to determine if a plugin will work with WordPress 2.8 or not. Thanks Alex