I did the firmware upgrade following the instructions from Nokia and the advice from Amy Gahran.
The reason I upgraded my firmware is because I had some performance issues. I followed the advice that I had gotten from different sources (here) and it didn't work. So, I had no choice to take a deep breath and upgrade firmware. The only glitch was that I had backed up the data on laptop which is a vista -and when I tried to restore, I got errors that the program was uncompatible with VISTA. Grr ..
I had kept my activation key and link to the original download. So I downloaded again. This time I installed the app on my memory card so it won't hog up the nokia phone memory - which is sort of limited on this version. Also, if it fragments - I can use the reformat trick.
Qik's co-founder told me that the ability to reinstall/reactivate the client once you do the firmware upgrade from the profile page. More info here: