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I updated from Fedora 6 to the test using the shell command 'yum update' and it worked okay. In general this is not recommended since it can cause problems. I backed up my home directory and .hidden files just in case.
You really should be using yum upgrade, this takes in to account --obsoletes (I.E. removing packages that are no longer needed).
Is the same as the update command with the --obsoletes flag set. See update for more details.