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Android 3.0 brings a new UI designed for tablets and other larger screen devices, but it also is fully compatible with applications developed for earlier versions of the platform, or for smaller screen sizes. Existing applications can seamlessly participate in the new holographic UI theme without code changes, by adding a single attribute in their manifest files. The platform emulates the Menu key, which is replaced by the overflow menu in the Action Bar in the new UI. Developers wanting to take fuller advantage of larger screen sizes can also create dedicated layouts and assets for larger screens and add them to their existing applications.
So, to sum up, old apps work fine, a small tweak will make the UI look right, and you can add a custom tablet UI to existing software.