How to upgrade the smoothest really depends a lot on your setup and distro specifics. Sometimes it is a click on a button, sometimes it is a disaster.
Simplest way is always a clean install. I always take that route, as it gives me the chance to cleanup and rebuild my system from the bottom up. That said, I'm not afraid to chown and chmod between my user.old and my user.new. Many will argue that chown'ing and chmod'ing all your files back into your home dir and putting all your emails back into your email client can be just as tedious.
I have bad experiences with keeping an existing user account and accompanying home_dir between installs. This somehow tends to break little yet annoying things that are tedious to clean up.
So it's a matter of taste as much as anything else. So long as you keep good backups of your important files anything that goes wrong can be fixed
