I put off this update for the longest time.
Turn off file vault (Remove espionage protection of folders as well)
Empty the trash
Make a complete backup using Carbon Copy Cloner
Run the installer (I had purchased this via the Mac app store, but had saved it using this technique: Lifehacker make an OS X Lion Boot disc or drive)
This was quite painless.
I went to system preferences, general, and turned off “automatically re-open windows” since I detest this new feature of Lion. More options for dealing with this are given here.
Update Onyx to a version made for OS X Lion.
I really ought to think about updating to Mountain Lion!