Check out the read me file in the zip file, that has all the details.
Assuming you don't have any custom updates, you can just upload all the new files and login into the admin. That will upgrade you to 1.1. The database and images are written dynamically so nothing in the zip will overwrite those.
As with any upgrade its always a good idea to backup all of the files and the database just in case you need to revert for any reason.