You can extract it into an existing folder. The Tor people recommend not doing that, and extracting to a separate folder each time. If you have bookmarks saved in the old one, you can export them into the new one (although you should only save bookmarks if TBB is on an encrypted volume). Personally I just extract over the old. The only time it was a problem was when they upgraded Firefox from version 10 to 17. Then I had to extract to a new folder. The yellow flashing update thing doesn't go away immediately in that case, but it's not a big deal. Goes away after a few hours.