We have performed dozens of upgrades of earlier versions of MS SQL Server to SQL 2008 without issue. The process is straight forward, even if it contains a significant number of steps, largely covered by install / upgrade wizards and the occasion misleading Microsoft error dialog.
The upgrade requirements are the same as the requirements for the installed version of MS SQL Server and a disk space for each database of between 2 and 10GB (if 4 GB if not SQL 2008 R2 Express).
The backup folder should be on a physically separate drive. As a significant percentage of catastrophic Server failures are hard drives failing in an unreported manner: cross linked segments even with SMART technology. It is strongly recommended that full backups are taken to a physically separate drive, and checked for restorability on a regular basis.
When upgrading, irrespective of the current version of MS SQL (2000, 2005, 2008) we recommend the target version should be MS SQL 2008 R2. The express R2 version is freely downloadable from Microsoft.
Upgrades can be inline - in which case the process is likely to take a hour or two. We have not experienced any difficulty with inline upgrades.
The first step is to backup the (Ava) databases.
If the decision is to migrate to another server then the following applies:
There is a requirement for two shared folders with full rights to be mapped to Ava users: one for document templates, one for update files.

Select find avapa.exe to update from.

Search for the new update shared folder.

The applet will show files being copied.
(This process will also copy the new connection udl files and bat files across to the client.)
Ava web pages run on any IIS that supports net 3.5 or 4.0.
Once the update is successful, change the compatibility of the databases to SQL 10 (2008) and then request an Ava update to the latest version.
Google's disk failure experience with statistics