This question comes up fairly often and since I will be part of a discussion on this topic tomorrow, I'll post documentation while I have the links handy.
This document covers how to do either an in place upgrade or migration to a new server. Either is possible, making the existing WSS server part of the new Portal server or migrating content to a new site. If resources are available, it appears migration is the way to go. Tools are available to assist with this process. Check out the section titled "Migration Considerations".
If you were running WSS over MSDE, this document provides information on how to upgrade or migrate to SQL.