I have to highly recommend the following blog article that talks about the upgrade of 10g BI Publisher reports to 11g.
Blog link: http://bipconsulting.blogspot.com/2011/07/10g-users-lets-upgrade-to-bi-publisher.html
Kan explains the process in detailed steps and I followed his steps to perform the upgrade. The upgrade was successful as he showed in the last picture of publisher reports upgrade section. I have seen my old 10g publisher reports folder showing up. But when I went under my report folders, I tried to open my reports xdo file, it gave me an error below:
The report cannot be rended because of an error,please contact the administrator.
It looked like my report xdo file is not associated with the correct data model file.So then I tried to edit my vat_report report and I saw that after automatic upgrade, my vat_report report was set with the default data model : vat_report.xdm which doesn’t exsit on my data model list. In the presentation layer, the actual data model is called vat_report. Match the correct model by clicking 
button.
Click View Report to check if you still have the error above and click save to enable the change.
Good luck!
Note: There are file structure changes for BI Publisher upgrade. The original .xdo now is split into two components – .xdm and .xdo as illustrated:(The following picture is borrowed from my other favorite blog: http://howtobi.wordpress.com/2011/01/14/upgrading-obiee-10g-content-to-11g/)
Insightful Life 
Thanks awfully for your information! I’ve just liked it.
awful piece of information, I had come to know about your blog from my friend vimal, mumbai,i have read atleast 13 posts of yours by now, and let me tell you, your blog gives the best and the most interesting information. This is just the kind of information that i had been looking for, i’m already your rss reader now and i would regularly watch out for the new posts, once again hats off to you! Thanks a million once again, Regards,obiee online training
Can we define the required .xdm file at the time of report up gradation process also so that we don’t need to do it manually each time?