Well you have three options.
Upgrade: All your files remain, including apps, settings, bookmarks, whathaveyou.
Archive and install: You get a brand new system, while your old system files are kept in a separate folder.
Erase and install: Erases everything and puts in a brand new system in there.
BUT, you should backup. Always backup cause you never know what might go wrong. Also, if you plan on the upgrade route, then make sure you don't have Application Enhancer installer (Shapeshifter/Cleardock and such need that Application enhancer).