DFS Resplication service is only supported in Windows 2008 Domain Functional Level. If Active Directory is running in windows 2000 or windows 2003 then FRS is used to replicate Sysvole. If Domain Funcation is 2008 the all the domain controller in the domain must be windows 20080

There lots of advantages in using DFS Replication over FRS to replicate SysVolume. Below link has details description on the DFSR Migration and advantages list over FRS

http://blogs.technet.com/filecab/archive/2008/02/08/sysvol-migration-series-part-1-introduction-to-the-sysvol-migration-process.aspx

http://blogs.technet.com/filecab/archive/2008/02/14/sysvol-migration-series-part-2-dfsrmig-exe-the-sysvol-migration-tool.aspx

http://blogs.technet.com/filecab/archive/2008/03/05/sysvol-migration-series-part-3-migrating-to-the-prepared-state.aspx

http://blogs.technet.com/filecab/archive/2008/03/17/sysvol-migration-series-part-4-migrating-to-the-redirected-state.aspx

http://blogs.technet.com/filecab/archive/2008/03/19/sysvol-migration-series-part-5-migrating-to-the-eliminated-state.aspx