1.0 characters will remain on the current set of Legacy Servers. The world transfer allows us to transfer between Legacy servers in order to determine which Data center suits us best. After that our 1.0 character will remain on those servers, at least for a while.

Yoshi-p mentioned in an earlier (live) letter that we will be able to transfer our 1.0 character to the new servers, but he wants to let new players settle in on those servers before allowing us to transfer to them.

No date has been announced when we will be able to do so though.