For upgrading to ML, when you buy it from the App Store, download it but do not install it. It will look like you have no choice, but just quit the installer. Then via the Finder, in the Applications folder look for the file named "Install OS X Mountain Lion.app" (the extension might not show, depending upon your settings). You need to right click (or control click) and select "Show Package Contents." From there a window with "Contents" as the only item. Open contents and look for the "Shared Support" folder. In there is the file "installESD.dmg." After this, it gets complicated.
FIrst of all the "installESD.dmg" is 4.35 GB. But it is a disk image and this means it is just a bit too large for a stanard single-layered DVD (I know, spec says DVD can handle 4.7, but a dmg file is a disk image file). You need to make sure it is double-layered type and you need to be sure your DVD recorder can record to that media. Second, you need to know how to burn the image file onto a double layerd disk. There are many sources on how to burn dmg image files onto disks.
My preference is a USB flash drive. Again, 4 GB may be inexpesive but it won't fit. You need at least 5 GB so an 8 GB or 16 GB would be best. I think 8 GB is enough, you need to be wiling to dediciate that USB flash drive for the whole time you have ML, at least until the next cat comes out. You will need to make it bootable to be useful as a rescue boot media. But you need to be able to work through the Disk Utility. (Applications-->Utilities-->Disk Utility). If the thought that Disk Untility has the ablity to wreck your system, don't use it. Have someone else who is familiar with it to create it for you. I highly recommend that you get a brand new USB flash drive and not one that has been used. Flash memory does not have a high cycle (write, delete, re-write) lifetime and nowhere close to magnetic media. This also means that you must dedicate it to be your recovery method.
If you want to learn how to use Disk Utility to create a bootable USB flash drive:
1. insert your brand new 8GB or more (more is usually a waste of money, since this will never be used for anything other than recovery.) USB flash drive. Never use this USB flash drive for anything else, not even just a simple temporary medium for transferring files.
2. launch Disk Utliity (Applications-->Utilities-->Disk Utility)
3. In the left pane, you should see your drives, including your boot drive (don't touch that one) and your new USB Flash Drive.
4. Highlight the DEVICE (the one that usually has a manufacturer's name). If there is anything below that, those are the VOLUMES. Do not mix them up.
5. On the right side of the screen, click on the "Partition" tab. (generally Disk Utility is kinder in that you cannot partition a volume - so if you don't see a Partition tab, you have not highlighted the DEVICE.
6. Under "Partition Layout" change it from "Current" to "1 Partition"
7. Click on the "Options" button near the bottom, and change the radio selector to "GUID Partition Table". If you choose something else, this won't be bootable (which is rather useless in this case). Make sure "GUID Partition Table" is selected, then click on "OK".
8. If the partion information area on the right does not accept any mouse clicks, click on the rectangle to the left of the partition pane. Then you can name it what ever you want, then you MUST change the format to "Mac OS Extended (Journaled)". Don't chose anything else.
9. Make sure that the size looks reasonable and then click on "Apply"
10. Disk Utility will ask you if you want to do this, in this case, click on the "Partition" button. Do not quit Disk Utility, we need it for the next steps.
So, at this point you've made a bootable USB Flash Drive, but have not put anything to boot with. Thus the next part:
1. Make sure your new bootable USB Flash Drive DEVICE is selected. Again, do not select the VOLUME.
2. Click on the "Restore" tab.
3. Drag the InstallESD.dmg file (should be near the bottom of the list on the left (it is a scrollable list, so you might have to scroll down) and drop it into the Source field.
4. Drag the USB Flash Drive VOLUME to the Destintation field.
5. Then click the Restore button.
6. Drive Utility will ask if you really want to erase any data on the destination, click Erase.
7. If Drive Utility asks for an adminstrator's password, enter it.
Now you are done, with bootable USB Flash Drive. If you ever need to use it, with the computer off, plug in the USB Flash Drive. Turn on the computer then immediately hold down the "option" key. It will take a while, but if you made the Flast Drive correctly it will appear in the list of bootable devices.