Here's my policy:
1) Updating to newest drivers, where driver set isn't a major change: Install drivers by overwriting.
2) Updating to newest drivers, where the new driver set IS a major change, such as when the 2xx-series came out, OR going back to older drivers: Uninstall drivers, restart, then install the new drivers (or the older ones).
3) Switching from Forceware to Catalyst, or vice-versa: Do a safe-mode driver sweep.
These rules have served me absolutely flawlessly for about 6 years now.
Sometime in the step 2 situations I might I do 'clean installs', now that those are available, but those things always worked fine with regular uninstalls before.
IMHO, a good many people on OCN are WAAAAAY overly paranoid/obsessive about removing previous drivers.
I rather like having the last 12 versions or so forceware versions extracted in my C:\\Nvidia folder, personally