The upgrade will reinstall the OS with changes.
It will be like when you first took it out of the box but with an updated OS.
All the programs that come with it will still be there.
It will wipe out any programs that you have installed.
It will wipe out any data you have in main memory.
It will not affect anything you have on SD or CF cards.
You should make a back up of all your data and programs.
Make sure you have installation files for all of your programs.
And all registration codes for those programs.
This thread tells you how to do it.