ArcSDE 9.3.1 to 10.1, metadata 10.x upgrade questions

We are copying datasets from ArcSDE 9.3.1 to ArcSDE 10.1. Does the metadata for the datasets automatically upgrade to 10.x format when copied over? When the 10.1 datasets are clicked on in Catalog, there is no "metadata upgrade prompt" despite having that option checked on in metadata options, so how can we tell if the metadata is in 10.x format already? Can ArcSDE 10.1 even store 9.3.1 format metadata? Does the metadata upgrade tool work on ArcSDE 10.1 data?

Thanks for any insight.