If a new version of Ubuntu is released, the update manager will notify you via an upgrade notification pop-up bubble. To upgrade, click the Upgrade button, and follow the instructions.
If you want to manually upgrade, first find out the codename for the next version of Ubuntu (in the same vain as Warty, Hoary, Breezy, and Dapper). Now open this file:
and replace the word "dapper" (or the code name of your current ubuntu) with the new codeword. Now run:
sudo apt-get updates
This command updated your package list. Now upgrade the system:
sudo apt-get dist-upgrade
You are asked if you wish to continue. Press Y, and then press Enter to continue. Your entire system is now upgraded.
source - http://www.informit.com/articles/article.aspx?p=667418