Upgrading from Windows Vista (32-Bit), Need Help.

What are my options, I'm planning on upgrade to Windows 7, but I want to be sure that I do this correctly. I have about 4GB of RAM, but will most likely end up having 6GB when it's all set and done. My cousin tells me that I have to switch over to the 64-Bit Version of Windows as the 32-Bit is probably no longer adequate. Here are my questions, hopefully someone can answer this for me:

1. Can I upgrade to 64-Bit, instead of 32-Bit? I noticed that upgrade versions are far more cheaper than buying the full version. I mean I don't mind paying for a full version but if I get the same functionality for less than a $100 then I'd rather save money.

2. What problems should I prepare for? How is having Windows 7 better than Windows Vista? Most people tell me it just runs smoother and it's like a service pack update that we have to pay for.

3. If I have to buy the full version, is it better to do a clean install? I would like to have the option of keeping my Dell Factory restore because its handy when I catch viruses and etc.

The specs of my laptop are listed below in the signature picture, it shows everything I have, you may have to click to look at a clearer picture. But at the moment, I think I've covered everything. Any help/advice in the right direction will be appreciated.

 

Can you expand on the "how" with the last sentence here, I'm not sure how to format a C partition while I have it turned on? I haven't done any of this before, if you could assist me, I'd greatly appreciate it.

Duly noted and corrected. Originally, I was supposed to get the 1920x1200 but they sent me the 1680x1050 and a screen is better than no screen, so the guy just refunded me the difference.

 

Ahh I see, so I will be able to do this with the upgrade disc right? And then use this obscenely weird method by editing a registry key? to make sure I can activate it?

Here I thought the plus was for glossy screens, I'll get around to fixing it when I get a chance.