I've had many, MANY cases over the years where dist-upgrade broke something in my installation or failed to finish for some reason.
Yes, in _most_ cases it works fine.
> Works WAAAY more without problems than the "backup; reinstall new version of windows (will reformat); restore; reinstall all your programs (ok, ninite.com helps here); reconfig 90% of your programs (they were expecting the config files to be in the old place anyway).
I've upgraded my Win2000 install all the way to Win7. I had to reinstall Windows only to do the switch from x86 to x64 (which is also non-trivial to do on Debian, btw).