yes.. all your .php files will be overwritten so you'll lose your hacks and .php file modifications..
Your modified templates will be safe though..
Check here (http://www.vbulletin.org/forum/showthread.php?s=&threadid=38545) for an alternative upgrading method
I know enough...I will wait for version three and upgrade my forum on my second server...the hacks are not that big and the translations are not too big also.....
Can I keep my templates for import or do the change HTML code as well for new features??