The ubuntu-desktop package is a meta package which means it doesn't actually do anything by itself, but only requests other packages by depending on them. When you install ubuntu-desktop, then it'll need to install all packages it depends on, or the meta package cannot be installed. If you remove ubuntu-desktop, however, only the meta package is removed, not the software it brought in.
For instance, if you have Ubuntu installed and you want to install Xubuntu, then you'll have to uninstall ubuntu-desktop first. That is because the notification systems are different. If you look closely, then you'll see that there is a conflict between libnotify-osd which is used in Ubuntu and xfce4-notifyd which is used in XFCE. Neither one is essential, so you can safely ignore the warning that ubuntu-desktop needs to be removed.
I realize that you didn't ask for XFCE. But the point is that you need to know why ubuntu-desktop cannot be installed. It might be a very minor issue, in which case you can just ignore it. On the other hand, it might not. It's impossible to say without knowing.
Ubuntu 11.10 beta 1 is safe to experiment with and test but definitely not safe to upgraded a working system to. I have been playing with Oneiric Ocelot since alpha 2 doing a nightly manual update and I still get messages saying that some program or other has crashed.
My last update left me unable to use Unity 3D. I got the background image but not the Launcher, Dash or application indicators. I had to log in to Unity 2D and do an update and then I could log into 3D.
So, the answer is: No, 11.10 beta is not safe to upgrade.