This was one of the reasons why I changed my system to have the seperate /home partition as mentioned by
I had tried the upgrade option a few times, and it always broke something somewhere. I never did find out what it is with the mandrake/mandriva upgrading facility, that seems to be "so rubbish" compared with the distro's overall reputation of being "friendly".
anyway, after I changed my partitioning scheme (which I actually did after trying gentoo for the first time), it was "a breeze", just to re-install/install an updated version. You just tell it that you don't want to format you /home (/dev/hda4 in my case, you may have something different, depending on kit).
The main distro is installed into the / partition so it means that as long as you install all the same software packages every time, then you should just be able to log into the new version but as user and everything "just" works. With no loss of data (files, customisations, address books etc etc).