I just upgraded my xcode directly from the website i.e. I downloaded the new version of xcode which came with ios4 - yet when I finished installing everything including the SDK it now says base sdk missing?!?
you have du update your app, too.
in Groups & Filesklick on Targets and doubleclick you application. then select your configuration and search for Base SDK under the Architectures section. select the 4.0 there