Upgrade is just installing over top of your existing.
The search bot is to allow searching GJ Groups using Joomla search. It has no affect of internal searching in GJ it self so you can use the search fields on categories and group pages perfectly fine. You can disable them from Configuration though if you want. Ensure when installing the search bot you install the correct one for your install (J2.5 for J1.6-J3.0 and J1.5 for J1.5).