From my experience, RC3 was not really a viable option for upgrading to the release version if you want future upgrades to work (this was on the 512mb build, in case the size is relevant to the failure). I could upgrade to the release version, but the next time I tried to do an upgrade to anything, it would fail with an error (some error with writing to /etc/fstab I think). It also lost the ability to change the default bootup slice for the same reason. I've had no issues upgrading from a card starting out fresh with the 1.2.3 512mb image, however. If you fill up the drive too much with packages, it could also interfere with upgrading, as far as I know.