Apple will be releasing their next generation OS X Lion 10.7 operating system any time now, bringing over 250 plus new features. According to Apple, upgrading to Lion requires three simple steps – Step 1: Make sure your Mac can run Lion (Core 2 Duo or higher); Step 2: Make sure you have the latest version of Snow Leopard (Mac OS X 10.6.8); and Step 3: Download OS X Lion from the Mac App Store.

However, a major OS upgrade is not that simple and everyone should take steps to prepare for when something goes wrong, as well as to get the best results out of the upgrade. What steps you take will depend on how you are planning to upgrade. Completely automatic upgrade where OS X Lion installer does all the work, or a clean install where you start everything from scratch and manually transfer your data after installation. Whatever method you choose there are three things you should do before even thinking about upgrading to Lion – update Snow Leopard, cleanup and backup.

• Update Snow Leopard: To upgrade to OS X Lion it is required that you are running Mac OS X Snow Leopard 10.6.8 with at least 8GB of available hard drive space. Make sure that you are running Mac OS X 10.6.8 and if you are not just go to Menu > Software Update and get it. If you are still running older version of Mac OS X like Leopard or Tiger you should get Snow Leopard. There are ways with which you can upgrade from older version like Mac OS X Leopard, but the process is complicated.
• Cleanup: With regular usage operating systems collect lot of unnecessary junk and duplicate files. For cleaning up the log files, cache and repairing disk permissions we suggest that you use OnyX. And for removing duplicate files use Singlemizer, it finds duplicate files and gives you an option of removing them. These two programs will not only increase the available disk space by removing junk, but also speed up your Mac.
• Backup: If you are using Time Machine for regular backup it would be sufficient normally, but as you are about to do a major OS upgrade we would suggest that you make a second backup using Carbon Copy Cloner. What Carbon does is that it makes a bit-for-bit copy of your hard drive, say a clone of your hard drive. So get a second external hard drive plug it in and use Carbon Copy Cloner to make a clone of your main (Macintosh) hard drive. In case of complete failure you can use this clone hard drive to boot your Mac.

After following these three steps you are ready for OS X Lion 10.7 upgrade, if you are planning to do automatic upgrade using Migration Assistant in OS X Lion installer, which will automatically migrate your data to the new OS. However, if you want to do a clean install and manually transfer your data, you will need to prepare and store your data on external hard drive or a second computer. 

Iijitsch van Beijnum has written a very good article on Ars Technica describing each of the steps required to prepare your data for manual migration from Snow Leopard to Lion. He explains how to save and prepare data from Keychain, Safari, Address Book, iCal, Mail, Applications, Documents, iTunes, and iPhoto for transfer to a clean installation of OS X Lion.