I now quite a few customers runing SolidWorks wiht SmarTeam R20. For the most part it is working for them with out issue.
As for upgrading files in the SmarTeam Vault to the latest SolidWorks version, The following utility from xlm (www.xlmsolutions.com) is available to do it. http://xlmsolutions.com/Documents/xLM_Solutions_SMARTEAM_Solutions_and_Technologies_VaultProcessor.pdf
For every SolidWorks file in the SmarTeam vault, it will copy it out, upgrade it and put in back in the vault with out touching the file's revision.
Are you an xLM rep?
What viewer are you using with R20? The R20 viewer doesn't support SW2011?