We just did this last week at Disneyland and we did not use them before we upgraded. We went to the ticket booth the night we arrived and it took about 10 mins to get it all done. Looking forward to another year of Disney!!
Suzie, the idea is to use them so that they are valued at the gate price. So if you simply went into the park using your pass and then walked to guest services and then upgraded, you'd do fine.