Previously, I thought upgrading wordpress is a difficult task. But its not. Previously, I was using WordPress 2.7.1 but now upgraded to 2.8.1. Let me share my experience with you.
Following are the methods that should be performed, IMO :
1) First of all backup your all files. Either download those files to your PC or use a free FTP site to transfer your all current files to other server. I did both, just to be on the safe side.
2) Deactivate all your plugins
3) Download latest WordPress from here.
4) Now delete your old wp-includes and wp-admin folders.
5) One important thing to take care now. Do not delete wp-config.php file, robots.txt file and wp-contents folder.
6) Now copy wp-includes and wp-admin folders to your server. Also replace all files in the root.
7) Thats it, now you just need to run the WordPress upgrade program by typing: http://wwww.yourdomainname.com/wp-admin/upgrade.php
8) Now you can reactivate all your plugins. Also you may need to update Permalinks. I didn’t felt the need to update permalinks.
How to upgrade WordPress: Official tutorial
For extended tutorial to upgrade WordPress, click here.
Note: Please follow all steps with acute care. Don’t delete wp-contents folder even by mistake. Because it contains all your themes, plugins and all your uploaded files. Its better if you take backup of your blog before upgrading.
So, these were the steps you’ll need to perform to upgrade your WordPress. Happy blogging.