jiggs
The correct way is to always replace plugin files before running the Upgrader. So in this case you'd download the core files + any new builds of plugins that you currently use (or want to use) from our website. You'd backup all current code files and database (just in case). Then you'd fully replace the code files/plugin files with the new ones you downloaded from our website. Then you'd access the system from a browser, login, and run the upgrader.
You should not lose existing data for any existing plugins. Our upgrader should properly handle the existing data as needed.
Cheers.