Which DNN3 version are you running ? please notice, that there have been major changes in DNN 3.3.0/4.3.0 regarding user management and file handling. If you have a default web site, there should be no harm. Backup is always needed!!!
DNN 4.3.x has the same functions as the adjacent 3.3.x version. Switching from 3 to 4 is not a big deal, just make sure to swich the asp.Net version, before you start the upgrade. For the upgrade procedure, follow the instruction in the installation manual included in the documentation pack (available from download page).
Use install package, if you want to get all the newest versions of default modules or upgrade package, if you want to install upgraded / new modules manually. I always recommend for production sites to remove all modules not needed prior to installation for better performance. Please notice, that some of the new modules are rather large, those are Blog, Forums, Gallery, Repository and Shop.
There are 3rd party modules outperforming core modules in functionality, though core modules shall guarantee support of all future versions.