You can upgrade in-place by replacing the files where they are and using your old config.php ... the backup is just for safety but you shouldn't need it.
Oh, and you might as well get 1.1.1 rather than 1.0.9.
See: http://moodle.org/doc/?frame=upgrade.html
I suspected that it might be 1.8 as well but it has a different look and when I visit the admin page it states that it is 1.9.
I am quite the neophyte with using cPanel and other utility programs to install software. I have downloaded and installed moodle 1.1.1 on my desktop computer. I would like to install it at my site (http://MySandbox.net) but it is unavailable with the fantastico software that comes with my server host. I tried unsuccessfully to do this manually using the cPanel File Manager. I know that this probably isn't the forum to discuss these questions so I will see what I can find out elsewhere. I think that other people may find themselves in a similar situation. If I learn the process of how to do this, I can post the steps here.