Q: Will it be possible to upgrade a Generation 1 virtual machine (VM) to a Generation 2 VM?
A: Unfortunately, because of the move from being BIOS based to UEFI based, it's not possible to upgrade a VM from a Generation 1 to a Generation 2. Instead, it's necessary to perform a clean installation.
This is very similar to trying to move a physical machine from being BIOS based to UEFI based.
Typically you need to reinstall; however, with enough work, there are ways to back up the old OS to an image, reinitialize the disk to GPT, then restore images. It's a lot of work.
I talk about some of the UEFI challenges in "Q: Windows 8: What Tips Will help me install Windows UEFI to a machine I built?"