I currently have Firefox 2.0.0.16. If I download and install Firefox 3 does it install over the old version and import the bookmarks? Is there anything I should be aware of when I upgrade to Firefox 3?
I currently have Firefox 2.0.0.16. If I download and install Firefox 3 does it install over the old version and import the bookmarks? Is there anything I should be aware of when I upgrade to Firefox 3?

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You can install Firefox 3 over Firefox 2. The installation procedure will preserve bookmarks and settings, but it doesn't hurt to backup your bookmarks before installing Firefox 3, just in case.
Some add-ins may not work in Firefox 3; they will be disabled automatically.
If you like to have Firefox prompt you on how to handle each cookie request, you may find a new behavior in Firefox 3 annoying: it displays the relevant tab behind the dialog, which means you can't just respond to the dialogs and stay on the tab you are reading.
Otherwise, it seems to work well. <img src=/S/smile.gif border=0 alt=smile width=15 height=15>
You can use the (slow-loading) Knowledge Base at http://support.mozilla.com/ for step-by-step procedures and troubleshooting. See "Backing up your information".