Since it's on a different drive, you need to create a new VPS, transfer your domains over to it, and then destroy the old VPS. This is what I did. You get 1 GB memory and 30GB storage.
So yes, you can upgrade, but your current VPS can't. You have to put all your stuff in a new box.
FWIW, when you transfer a domain to the new VPS, you get a message that says it takes 15-30 minutes for the transfer to be complete. It took longer than that. I gave up watching after an hour and went to bed. By the morning, all my domains had transferred over. This is probably because it's new, and those systems are getting pounded a bit. I would imagine that after a month or so, when there are fewer barbarians at the gate, it really will take only 15-30 minutes.