This probably sounds stupid to seasoned veterans, but it caught me this morning, and I've been using Drupal for a couple years.
Best practice is to backup your old drupal install directory and replace it with the new version's contents. In other words, you shouldn't un-tar on top of your old install, you should install a fresh, new copy of drupal and copy the pertinent files from your old install. I've always done it this way, and I've never had a problem.
The GOTCHA here is this:
I copied my "files" directory and my "sites/default/settings" and my gallery2 stuff, BUT I FORGOT TO COPY MY ".htaccess" which produced 404's or page not found style errors EVERY TIME I TRIED TO LOAD A PAGE.
I felt like an idiot, but fortunately I was able to sift through my apache errors and I figured out what happened.
I've seen a couple mentions of this in random posts, but I wanted to create a post with a quick head's up to anyone having this error or thinking about upgrading.
Thanks for your time. Good luck getting all your contrib modules working. I haven't even begun that yet!