I upgraded this Wordpress-powered blog to the latest (2.1.3) version, and I have to say it went well. With Dreamhost, they provide you with 1-click installs on a few of the popular open-source software packages. They even backup your old install before they upgrade the new one (I still downloaded a copy just in case.)
Even though Dreamhost said I would have to re-install all of my plugins, I didn't have to (your mileage may vary). I have to say that's the smoothest software upgrade I've ever encountered. I would say my blog was probably inoperable for a total of 2 minutes, at which point I went to my blog and happily found it running just as before.
I switched from GoDaddy to Dreamhost some time ago when I moved away from Coldfusion (godaddy wouldn't support flash forms on their hosted accounts!!), and decided that PHP and open-source was the way to go. So I wouldn't run into anymore nasty surprises like that again.
So far my experience with Dreamhost has been stellar.