With the imminent release of Windows 7 this year, you need to check if your PC is compatible or the not. The Windows 7 Upgrade Advisor will help you determine if you can upgrade your PC or not.
My own preference, and one I always recommeng to clients, is to always do a clean install of a new version of Windows. An OS upgrade will quite often cause more problems. If like me, you install different applications, there can always be some piece of code that will cause an issue.
In the past, I have tried Windows upgrades but I always end up having problems, whereas I never have the same number of issues with a clean install.