Simple enough I downloaded the new version of Grails, updated the environment variables and its good to go in the command line.
I placed the grails-1.1.1 directory next to the grails-1.1 directory, that way I can revert to 1.1 if I manage to screw things up too much.
Next I needed to point IntelliJ to the new version of grails. I found this to be a bit trickier. I’m not used to navigation this configuration, but eventually I found it. Right clicking on the project root in the project folders there is an option called Module Settings. 
Press new and point it to the grails-1.1.1 directory.
Right my first test compilation failed. Apparently the ui-performance plugin was acting up with the 1.1.1 version of grails.
It turns out that there is a known issue with the ui-performance1.1 versiona and version 1.1.1 of grails. The error you when you create your war file is the following:
Error executing script War: groovy.lang.MissingMethodException: No signature of method: com.studentsonly.grails.plugins.uiperformance.ResourceVersionHelper.version() is applicable for argument types: (java.io.File, java.lang.String)
now the issue is reported here. There is already a fix for it, all you have to do is upgrade to version 1.1.1 of the ui-performance plugin.
grails install-plugin ui-performance
Now I got it to work after upgrading the plugin and running the clean command.
grails clean
Now everything is working accordingly.
Upgrade complete.
