I have done this.
It updated fine.
from downloaded ISO

It keeps files and folders but attention
On Mine I lost all my preloaded software.
Had to reload it all again.

Just make sure you have all the software and serials if you want to keep them.

Only thing that would not work was a wireless n usb stick (Realtech drivers)
Have got a driver that loaded but it still cannot see the usb stick.
Had a Netgear stick and they had a Win 8 driver (Beta) that worked fine.