Upgrade the distribution, or reinstall the system?

Solution 1:

I'd go for the upgrade. You'll receive a pop-up in about two weeks with the very question and all you have to do is click OK and enter your password. Upgrading gives you an identical system as you get with a full install, but the advantage of upgrading is that you don't loose installed programs and your configuration files.
Only if you've been making a mess of your install and want to get rid of things that you broke experimenting, then a full install is advisable.

Forget what you read about Windows upgrades and a full install being better. Upgrading Linux works in a different way.

Although all your files should be fine during an upgrade, always make sure you have a backup of you personal files before upgrading/install on a different disk/dvd/usb stick/...

Solution 2:

If you have a separate /home and /boot partitions, you'll be able to do the following trick: free some space for new installation, install new system into that space, specify old /home and /boot partitions for new system, do a backup of /home, create the list of installed packages in old system. At this point you'll be able to dual-boot in both old and new systems. Do upgrade of the old system and do the installation of packages according to the created list in new system. At this point you'll be having a two versions of environment to choose from - old upgraded and new with the same set of packages as the old. Try them both then decide which to wipe, which to live on.

Solution 3:

Yesterday I have upgraded to 12.04 myself from internet not from iso-file. Advantage: you keep all you indivual stuff and configurations Disadvantage: it needs much more time that a new installation. But you can stop the process and continue where you have stopped.