I would look in mp_Sites, set PasswordFormat to 0. Touch Web.config to clear the cache and you should be able to login.
It sounds like the password format was changed in the mp_Sites table somehow but did not actually encrypt the passwords in mp_Users so it fails login.
You may also need to set the failed login attempts to 0 on your user in mp_Users in case the account was locked due to failed password attempts.
I do not think the upgrade process did that or there would be lots of reports of it.
After logging in you should fix the new user to have a clear text password, backup your db, and then if you want to use encrypted passwords try changing it from the SiteSettings page.
Hope it helps,