I always delete the older version entirely and replace it with the new one, I'm not sure what would happen if you copy-pasted the newer files over the old ones tbh. The save files are stored within the actual game folder, in "Small on Top/www/save", if that's what you're looking for. You can copy-paste the content of the save-folder into the new one, as long as it's the same version of the game there shouldn't be any problems.
I'm not the developer of the game, I'm 'just' the guy who beta-tests all the update before release, creates the prepackaged save files, and writes/updates the walkthrough. However, Spedumon does have a channel for fan art in his server, so I doubt he's opposed to it, as long as you credit him. But you can always ask him personally, the link to his server is right here on the game's front page