Well, this is not an actual solution for your problem, but I will tell it anyhow.
I have used Linux for something like 6 years, and during that time I have updated and re-installed more linux boxes than I can remember. To avoid various problems with the upgrades, I *never* choose to upgrade an existing system. If I have data that I want to preserve, I just copy them in one partion, and then install new Linux with the "Install" option. You just have to make sure, you will not select to format that partition, where all your data is. (I allways make sure that /usr/local is mounted on it's own partition. Thats also the place to keep all shared stuff in the system, like mp3 and divX files, since the installer will not put much stuff under that directory.)
I think you can do the same thing and get rid of that problem. Hope this did help you.