In most cases it is not necessary to delete (replace) existing presets when updating. However, it is necessary to reset global parameters and this causes the setlist names to be changed to the factory settings, although it does not affect any presets in the setlists. So if your pre-update setlist names were different from the factory setlist names you will have to edit the names manually to restore them.

In some cases, however, it is necessary to replace existing presets because the update renders some or all existing presets incompatible with the update. For instance, some time ago there was a Pod HD firmware update that addressed an issue involving invalid data in certain presets. In that case, any existing presets that contained such data were suddenly unrecognized by the new firmware and had to be replaced.

Personally, I always make a backup of all my setlists before updating firmware. I then choose to replace existing presets during the update, then make a copy of all factory setlists immediately after the update, and then restore any setlists that I had saved before the update. That way I can get the benefits of any new factory presets or setlists as well as keep my custom setlists, and load the ones I want at any time.

Don't worry about not being able to reload presets in the new firmware after saving them in the old firmware. Except for cases where there are good reasons why this shouldn't be done (like the invalid data situtation described above) the save/restore process is reliable.