By "upgrade" are you referring to the plugins that you currently have (that is, after the 'upgrade' you are on the new level of Eclipse complete with your current set of plugins), or the workspaces you currently have?
Every time I get a new version of Eclipse I place it in a new location (I tend to add the version number to the directory so I have mine at /opt/java/eclipse-3.3 and /opt/java/eclipse-3.4), and then re-download my plugins. Needless to say I don't have that many plugins. I suspect there is a better way to do this so I am looking forward to hear suggestions from other ranch hands.
For workspaces, simply opening the workspace with the newer version seems to work for me. Of course, if I have not yet installed all of my plugins I sometimes get errors about views that are no longer available.