I am kinda new here, been much of a reader vs. a poster.
The best way to upgrade you ask. I don't know what the best way is. I am guessing that doing a clean install with Win7 Pro 64 bit (I have been told Pro is better then Home by someone on this board with expereince) would be the course of action to take. Then downloading ThinkVantage software from this link:http://support.lenovo.com/en_US/detail.page?LegacyDocID=MIGR-61432#update
Now there is a list of components on that web site. I would install the Power Manager, Rescue and Recovery, System Update, Fingerprint software (if you have a finger print reader), Active Protection System, Access Connections. If you have a Mobile/WWAN card then I would install Lenovo Mobile Broadband but maybe you don't need this if there is other software that runs the card.
I know that I use Access Connections for my wifi/bluetooth, System Update (if you like to manually update your drivers then you don't need this), Fingerprint software and I am guessing that I have the Active Protection System software installed.
Also, I would think IBM/Lenovo would have just one software package that downloads what you need based on your machine type so one would just do one install.
I am sure I there are other with more experience then me, that can help you also.