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Having more faith in Vista than probably anyone else on this forum, I wouldnt recommend doing a direct upgrade unless you are prepared to end up formatting and reinstalling vista from scratch.
I would say make the appropriate backups, and install fresh.
The application compatibility problems are not as common/widespread as the media and the i'll-hate-ms-no-matter-what jackasses would have you think. I'm pretty confident your software will be fine if installing on a fresh OS.
I suppose I could Partition my hard drive, would that remove the need of reformating and reinstalling vista?
Do I need a certain program to dual boot? or is it an option when installing an OS?I believe you should be able to do dual-boot, in which case that would be the safest option.