Ben Goodger (lead engineer of Mozilla Firefox) has announced that Firefox profiles will now be stored in a "Firefox" directory instead of the current "Phoenix" (Phoenix was the name of Firefox even before it was called Firebird) directory. This will be activated in nightly builds starting from tommorrow next week Thursday.

This change will be in the 0.9 release of Firefox and the migration engine will automatically migrate all Firefox-related data (bookmarks, userChrome.css, preferences, etc.) to the new folder.

There will be no auto-migration of extensions (as far as I know), so there is the hassle of reinstalling your extensions (if you installed them to the profile folder). Hopefully, the Firefox team is considering, or is already at work, implementing migration of extensions as well. Well, we'll see what's really in store when the other major extension related feature, the extension uninstaller, is implemented.

Migrating multiple profiles doesn't sound like fun either:

Alternatively you can import one profile, run Firefox with the profile manager and delete the profile (but make sure NOT to delete the files) then run Firefox again and import the other profile. Run Firefox with the profile manager and create a new profile in the same location as the deleted one and all the settings in it will be picked up.

I do not know if this are only temporary measures for nightly build users, or are going to be the same for Firefox 0.9. But I am pretty sure Ben and the team will be making migration as hassle-free as possible, within the limits of what's possible and what's not.