You will not lose all of your files and applications when upgrading to Windows 7 as long as you choose the upgrade option when installing the new OS. However it is always a good idea to have all of your files backed up in case of a virus or even just an accidental deletion.

It is strongly recommended to  back up your data files, or save them to a safe location, before upgrading, but no your data should be safe. In terms of backup media It's your preference. My personal opinion is a HDD is a HDD whether internal or external.  All can fail and crash.  When kept properly a disc can last longer.  It's also a matter of the information your backing up.  If you backing up software and drivers you may want to use a HDD because in time there will be newer versions but if its documents pictures etc a DVD is a good choice.  Ask yourself how long to do plan to keep this data your backing up?  It is important to me?  In the ideal situation if its something you dont want to ever lose, use both methods.  Flash drives are also a good choice since unless you damage it physically its very hard to lose information on them as data recovery is very easy on these types of devices.

As for the ticket, I do not know for sure but I would think as long as you had your order information and your within the warranty they should but again I do not know for sure. 

ty guys, you've certainly helped :)