At 10.1 ideally you're moving away from using the SDE service and towards using direct connections. Read the section "Create Database Connection (Data Management)" in the documentation which should suggest how to create a connection file to a 10.1 geodatabase. The 10.1 connections look a bit different than the previous connection dialogs. Below is a sample I used to connect to my Oracle geodatabase that does not have user schema geodatabases in it.
import arcpy
folderName = r"c:\temp"
fileName = "testConnection.sde"
databasePlatform = "ORACLE"
instance = "mydatabase.world"
username = "myusername"
password = "secretpassword"
arcpy.CreateDatabaseConnection_management(folderName, fileName,databasePlatform,instance,"DATABASE_AUTH",username,password,"SAVE_USERNAME","#","#","TRANSACTIONAL","sde.DEFAULT")