I don't have an empeg I can log into in front of me, but I want to say yes. There is the music data partition, the root partition, the swap partition, the dynamic data partition (for bookmarks, current running lists, EQ, etc., and it's not a mountable filesystem), and a blank partition. And that's on each drive.

Wait. There's bound to be a FAQ for this. Hmm. Not really.

Anyway, it overwrites the root partition and that's it as far as the hard disk. (It actually overwrites it with a filesystem image, so there's no way to keep data there during an upgrade.) You can keep files in /drive0 and you can actually create a new filesystem on that blank partition. Neither of those will get deleted during an upgrade.