Ok first you definitely don't need to repartition. Worst case scenario, things will go wrong and you'll have to reinstall over your existing partitions. However, Fedora has a neat little "detect old installation" feature that will give you the option of upgrading an older version of FC to a new one.
Just one word of advice. Download the FC3 images, burn them to CD, and when it's time to install, RUN THE MEDIA CHECK IN THE FC3 INSTALLER!!!!
A while back I upgraded from FC1 to FC2. The install detected an old FC install and proceeded to install new packages over it (ie, no format required). However, in the middle of the second cd it found a corrupt package and couldn't install it. I couldn't go back either as the new system was half installed, so I had to wipe the partitions clean and redo everything from scratch. Running the media checker at the beginning of the clean install told me that the cd I was using was no good. So when you're installing FC3 the first thing it'll ask you is whether you want to check your installation media...check every disc. It will take a long time and you'll probably be pissed off but it's worth it.
Other than that little detail, things should hopefully be pretty smooth! I've heard good things about successful FC upgrades.
PS: FC3 is worth the trouble