The first type of distribution upgrade we will look at is an actual upgrade. Any distribution upgrade takes the currently running version of your operating system and upgrades all applications (from the kernel to the user space applications) and upgrades each and every piece of the puzzle. On top of upgrading all of the applications, a distribution upgrade will get and install (or upgrade) all necessary dependencies.
One of the best reasons to upgrade is the retention of all user data and files. In theory an upgrade will not effect any user data; which means, upon completion, the user will be able to log on as usual and all of their files and configurations will have been retained. This becomes the obvious choice (over a fresh installation) when the user has a lot of important data and/or configurations on the machine.
Of course a distribution upgrade is only possible when you are upgrading from one release of a distribution to another. For instance: You are running Ubuntu 8.04 and want to upgrade to Ubuntu 8.10.