How to upgrade a Rails 3.0 app to Rails 3.1?

I have a Rails 3.0 app (technically 3.0.7) which I would like to upgrade to Rails 3.1 to make use of the new asset pipeline and other fancy new features. What is the best approach to doing this? Should I use the rails new generator, then copy everything from my old app over to the new one? What about version control? I already have my old app using Git.