Update or remove & install?

I am new to WordPress and I just realiized that the version I am using, provided by my ISP, is 1.2 and that you are up t0 2.0.2. Since we have not started using WordPress I wonder if I should just go ahead, erase everyting and install 2.0.2, or if there is a way for upgrading my version. What other requirements do you have for 2.0.2? I suspect that MySql is not up to speed either.