Update2: More details from Harry Waldron. According to this installation guide for firefox 1.0, you had better backup/delete/restore your profile directory before a clean installation of a new version. I didn't do this. Fortunately haven't meet problem yet.
Update: Here is a list of security bug fixed from Donna.
Download firefox 1.0.1 here. According to the release notes, this release fixed some security bugs.
Upgrade from firefox 1.0 to firefox 1.0.1 (Windows)
First you should uninstall firefox 1.0. You don't have to worry about your bookmarks as well as other personal settings. They are stored in Application Data directory under your account profile.
Issues after upgrading
All your installed extensions will be disabled until they are confirmed to be compatible with firefox 1.0.1. I don't test this, because I don't use many extensions. One thing I noticed is that Answers.com dissapears from my search bar, which is a plug-in I installed at firefox 1.0. So it seems to be put in firefox installation directory, and will not be preserved after uninstall the old version.