Updating Gentoo to the latest release

Before doing this, I would suggest that you have applied all available updates for the current release you have installed.  Therefore:

emerge --update --deep --newuse world

will take care of this for you. 

I did this with my 2006.1 systems.  2007.0 had just been released, and it was really easy.  First off, you need to install a package called eselect:

emerge eselect

after this, we now need to see what profiles are available.  If you've not sync'd with your mirrors recently, I suggest you do this first (emerge --sync).  To check the available profiles:

eselect profile list

you should get these kind of results under 2006.1:

Available profile symlink targets:
  [1]   default-linux/x86/2006.1 *
  [2]   default-linux/x86/no-nptl
  [3]   default-linux/x86/no-nptl/2.4
  [4]   default-linux/x86/2006.1/desktop
  [5]   default-linux/x86/2007.0 
  [6]   default-linux/x86/2007.0/desktop
  [7]   hardened/x86/2.6
  [8]   selinux/x86/2006.1

so, to change to the latest version, which here is option 5:

eselect profile set 5

when you re-run the eselect profile list command, you shall now see your new profile is selected:

Available profile symlink targets:
  [1]   default-linux/x86/2006.1
  [2]   default-linux/x86/no-nptl
  [3]   default-linux/x86/no-nptl/2.4
  [4]   default-linux/x86/2006.1/desktop
  [5]   default-linux/x86/2007.0 *
  [6]   default-linux/x86/2007.0/desktop
  [7]   hardened/x86/2.6
  [8]   selinux/x86/2006.1

now, it's just a simple case of:

emerge --update --deep --newuse world

to update your system.  Add the --pretend flag if you want to see what updates will be applied first before updating the system.