As I posted in another thread, Robert Crane from CIAOPS is a Sharepoint guru and has posted a series of steps to migrate data from WSS3.0 to Sharepoint Foundation Server 2010 on his blog. I used them the other week to migrate 2 different clients to SFS2010. Worked flawlessly!
It's posted in 15 different sections so I'll give you the link to the last one that has all of his previous steps listed in order. Hope it helps you!
I know it says it's for SBS2008, but tbh, that doesn't matter. If you find something that is specific to SBS, ignore it and carry on.
As always, make sure you've got a backup/rollback plan in place before you start anything.
To provide a little more detail from some of your followup questions, you can access your SQL Express database through Management Studio Express quite easily. My boss posted how to access iton our blog a while back: http://www.grassrootsit.com.au/2011/blog/shrinking-sharepoint-wss-database-and-log-files/
Step 3 is probably the most relevant to your interests (although, I'd recommend making sure that your logfiles haven't bloated up too badly ;)).