@zardiw - I did an upgrade for a client a month or so ago. The process was fairly simple. The docs give info about how to upgrade. Basically, you create a new install of phpBB and then import the data from the old version.
The biggest problem I had was the enormous number of users, mostly bots and spammers, in the client’s database. The upgrade script kept timing out. You can restart it and it seemed to pick up where it left off quite cleanly.
I think my process was roughly:
Backup the old forum’s DB and files
Create a new DB using your control panel
Create a new directory for phpBB3 (e.g. /newforums)
Install phpBB3 there
Run the upgrade script, which you point to your old install
After it’s done, you can rename the old directory to something like /oldforums just to keep them around and the new one to /forums or whatever you want. Before you use FTP or Webshell to rename the directories, update phpBB in its admin screens (even though for a few minutes it won’t be able to find its files)
Configure phpBB3’s new anti-bot and anti-spam features, clean out deadwood users, etc.