Just save a backup of your files and a dump of your database if you want to be safe.
Then get the new version of all of the files and copy over your previous installation.
Delete the /Connections/ folder to force a new installation wizard and specify your existing database.
I think that is the best way to update.
You could also copy your existing database and install the new version of powercms from a testing folder. Then when you are done you could copy over the database and files from the test location.