Toss the iTunes 3 prefs and Library folder (in your 'Music' folder) if you have run it already.
Put your iTunes 2 'iTunes' folder in your Documents folder. Launch iTunes 3. It should ask you if you want to move that library to iTunes 3.
If that does not work, drop the 'iTunes Music' folder into the library window in iTunes 3. It will then import and copy your music files into your new iTunes library. You will loose any playlists you hade in iTunes 2.