Itis highly recommended to backup your wallet regularly, and especially before every update.
Keep your wallet.dat copy offline. You can rename it like wallet-current-date-wallet-version.dat
Look for your wallet.dat file in    C:\Users\YourUserName\Appdata\Roaming\Mooncoin
or in C:\Documents and Settings\YourUserName\Application data\Mooncoin (Windows XP),
if you don't see the dir with wallet.dat on your PC, then switch on 'show hidden files' in your PC settings.
 Your wallet.dat file = your coins, if you lose it or overwrite, you'll be not able to get an access to your coins.
The updateto new version is 2 steps: saving your wallet.dat and running a new version, in some cases you may have to resync a new wallet.