Yes, using the update manager to go from 10.04 to 10.10 is one way of
doing it and it checks for incompatible software plus keeps data etc.

What can happen though is that the update screws up for some reason
and that can leave you in limbo with the only way out a clean install
anyway. In general, OS updates are a bit of minefield whether it's
Linux / Windows / Mac OS etc....

It appears your update worked and that's great, just pointing out that
that isn't always the case - also the more OS updates you do the more
the chance that it'll screw up big time.

Hence the advice to create a separate Home partition for data and then
doing a custom clean install to keep that data intact. Also using
Synaptic to create an installation script that will allow it to put
back all the software that is currently installed in one go.

When the next LTS arrives I think I'll be doing this separate Home
partition thing - not planning on doing any OS upgrade till then.