If you do decide to use the “install and move content” route, I would recommend upgrading your old installation to the latest version of WordPress to eliminate any incompatibilities.
How many plugins are you using?
I’ve migrated using both methods. I once backed everything up, moved it all over and started it up. In that case, there are instructions over in the WordPress Codex for doing it all.
Later, I wanted the simplicity of using the DreamHost one-click installs (as well as the notification of potentially tested upgrade availability), so I created a new install and moved all my content over. In that the hardest part was reinstalling all my plugins and setting my plugin settings and options.
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