Heres the steps I went through to install Snow Leopard on my own machine using retail builds, turned out I was being far more paranoid than I needed to be, but as I usual I suspect taking these precautions always means nothing bad happens!
1) Take the opportunity to spring clean the Mac
2) Backup using Time machine
3) Mirror hard drive using superduper so that if all does goes wrong its easy to return to a previous state
4) Check superduper clone works!
5) Install Snow Leopard
6) Install XCode 3.2 which is on the optional packages of the Snow Leopard dvd, which for having the Clang static analyzer built into the ide (Build and Analyze) is worth upgrading to Snow Leopard for alone
7) Install latest iPhone SDK
Re peform back up rituals 
All in all took a little over an hour most of which I was not sat in front the screen so quite painless and every for me at least appears to be working first time!
Great to hear it went well. Clang aside anything worth the upgrade? I’ll give it a go myself just as soon as I grow some cojones!
Xcode is reason enough definitely, certainly seems a little more responsive and stable as well
apart from a slight issue with my Microsoft 5000 bluetooth mouse not re connecting until I use the trackpad to go over the bluetooth icon, everything has been fine