Hi Colin, have you edited any of WordPress' core files? If not then your manual upgrade should go quite smoothly.
After you back up your database AND files, the manual upgrade is pretty simple and should not affect any of your wordpress settings unless you have made edits to wordpress core files.
The manual upgrade basically boils down to these steps:
1. backup db AND files
2. De-activate all plugins (I have a lot of plugins on some sites, not all of which are active all the time, so common sense, write down the ones that are active)
3. Delete the wp-admin and wp-include folders on your server. DO NOT DELETE YOUR WP-CONTENT FOLDER.
4. Delete all files wp-*.php files in the top level of your wordpress folder EXCEPT wp-config.php.
5. Upload all wordpress 3.1.2 files to your server except wp-config-sample.php
6. After upload is completed visit the following url:
http://YOURWPSITE.COM/wp-admin/upgrade.php
and follow the steps there.
And you should be all good to go. I hope! :-)
- Greg