Automattic released it’s new version of WordPress today. 2.0.6 contains security fixes, and other notable updates so I upgraded quickly. This release will be the last until 2.1 (which is in beta) comes out.

How to Upgrade in Five Steps
Step 1: Backup Database Tables and Files including .htaccess
Here, the objective is to save the data, and your customizations.

Step 1a: Save Data
Use phpMyAdmin or other appropriate tools provided by your webhost, to backup the database used by WordPress.

Step 1b: Save Customizations
Basically, backup the files that you have changed or added since you installed the standard WordPress.

Step 2: Deactivate Plugins
Deactivate all the Plugins you use at the Plugin Management Page.

Step 3: Overwrite Files
Get the latest and greatest WordPress (http://wordpress.org/download) and upload it to the WordPress directory, overwriting all the files that exist there. This will preserve your images and themes.

Step 4: Run the upgrade script
Visit your blog’s Upgrade Page ( http://example.com/wp-admin/upgrade.php ) and follow the instructions that are displayed.

Step 5: Reactivate Plugins one by one
Awaken the monsters, one by one, at the Plugin Management Page ( http://example.com//wp-admin/plugins.php ). Check if everything works as expected.

There, that does it.
Read the Detailed Upgrade Instructions if you want more intricate instructions!!!