I just upgraded to iLife 09 and I am receiving a"Can't Open file ~/library/application support/iweb/domain.sites2" message. I have search the string and cannot find the iweb folder in application support.
Make sure you're looking at the library folder inside your home directory and not the system level library folder. The ~ represents the home folder for your account. If the iweb folder is missing, then I hope you have backups because that's the only other hope you have.