I would think a few issues could arise from you being a teacher in the school prior to becoming the principal. First, the relationship you have with fellow teachers is far different from the one of the principal teacher. Therefore, you might have some problems reconstructing the relationship based upon your new role.
Second, the relationship between a teacher and a student is very different than a principal and a student. Principals are required to control far different issues than teachers. Students who believe that they have a good relationship with you may try to take advantage of your role as the principal.
I would suggest only applying for the position if you are certain you will be able to change your own perspective regarding the position and the relationships within the school, which have already been established. I would suggest speaking with fellow teachers about your concerns.