I can give you a partial answer. The upgrade will probably involve flashing your ROM, which means wiping it and overwriting it with new data. That means that you won't be able to get the old version back.
If you do get an upgrade it will have to be a specific one for your device and will come from the manufacturer, not Micro$oft. Their web site should have the price but for my Viewsonic it costs 40 US dollars.
All the reviews I've read say that 2003 is better than 2002, but unless you're unhappy with what you have there's not much point in changing in my opinion. I believe the main improvements are to do with wireless connectivity, which I don't use. Upgrading to 2003 is the only way of getting Media Player 9 though.
Nelviticus