All the info you need is a google search away.

http://www.sqlservercentral.com/articles/Administration/2987/

http://msdn.microsoft.com/en-us/library/ms144256(SQL.90).aspx

Of course ideally you'd want a dev environment to upgrade and test it.

As for latest patches, some people say don't patch unless there's a security or functionality issue.

Others say always patch. I don't have enough experience to say either way, although I patch my learning box often.