With my firm having recently installed and provided us with Revit 2012 (finally, only 7 months after it was released) much excitment has followed with everyone wishing to get their hand on the new software and rushing into upgrading their projects.
While the new software has many new features and improvements over the 2011 version, and in many respects can make our tasks easier with the improved tools and features, you must use caution before immediately jumping into 'upgrade mode'. As you should already be aware, Revit files are not backwards compatible, so if you upgrade it you will not be able to open it in the previous version. This is why it is a good idea to make a backup before performing any kind of upgrade.
While I personally have never experienced issues related to upgrading models between versions (which I have done serveral times) I have heard limited stories of people who have (and of course as all stories go, they were very bad). I haven't had a chance to get in and check the procedure myself, so all I can do is trust these people's words that things changed when they upgraded (anything is possible, even in Revit).
When not to upgrade:
Generally it is an accepted practice to never upgrade in the middle of a project, mostly for the reason listed above, you just don't know what soft of errors could come about because of the upgrade. You built the model in one version so keep it in that version forever, or at least until the project finishes up if you absolutely want to upgrade. Defanitely don't upgrade the project after CD's, especially if the model is being actively used by the contractor for construction unless you get their and all their sub's explicit permission.
Autodesk is doing a good job about making licenses (especially network licenses) work across several versions of Revit mostly for this reason, you may need to be running 2-3 different versions at any one time depending on when projects in your office were done. If you have a legal stand alone license, then the software will work forever. If you don't have a license, Revit will still work as a viewer on your machine, you just will be unable to print or save any files.
When to upgrade:
Each situation is different, therefore a qualified and experienced member of your team must weigh in on any decision to upgrade. There are pro's and con's to every decision, only you can decide what is best. I generally use the following rule of thumb (as with anything, exceptions do apply): if you are prior to DD, upgrade. Starting CD's, it's probably safe to upgrade. If you are in CD's, the point at which you are in the process matters. Early on, go ahead and upgrade at the next milestone or at a good point in the process. If you are close to finishing up and have most of the work documented, wait for the upgrade (if you do at all). There is still a chance that something will change and you won't catch it before sending out the documents. After each upgrade, take a close look at the entire model to make sure things are how they should be.
If/when you decide to upgrade, follow a couple basic steps to ensure you have a backup plan incase something really bad happens.
1. Delete your local file on your computer. Your upgrade will be on the Centeral file, which should be located on the server.
2. Backup your central file. Copy/Paste it into an archive folder, or copy/paste to make a new name.
3. If you have any linked Revit files (from consultants) you want to unload them prior to upgrading, this will require you to open the central file in the version of the software it was created (otherwise Revit will upgrade each of the linked models before opening your model, but it will not save the linked models beyond your current session, and it will take a VERY long time to open each time)
4. Open the Architectural model in the new software, it will be automatically upgraded to the new version.
5. Saveas the new file. I recommend placing a new suffix on the file name (such as '-2012') and save the new file as a central file.
6. Open the central file and create a new local file of the new version.
You will need to upgrade each consultant model separately, using a procedure similar to the one listed above and then link the new version into your architectural model after it shares the same version as your architectural model. You can also have the consultants upgrade their models on their own and send them to you for you to link (then you aren't responsible for any errors!)
Good luck and have fun with the new version! Make sure you have downloaded the latest upgrades, and if you are on subscription (which all versions of Revit are) ask your IT for the free addons and downloads (integration with the cloud rendering service is one, and the new 'etransmit' feature from Autodesk Labs has some exciting potential!)