what do i need to do with my current iPhoto before upgrading to iPhoto 11? i don't want to lose any of my photos!

Welcome to Apple Support Communities

When you open iPhoto '11 for the first time, your library will be upgraded in order to be used with iPhoto '11. If this process doesn't finish correctly, you will lose all your photos.

Because of that, the only thing you have to do is to make a backup of your iPhoto library before upgrading. Just open a Finder window, go to the folder where your iPhoto library is (normally, Pictures) and make a copy of it in another folder or drive. With this, you can upgrade safely to iPhoto '11

I highly recommend using an external drive and making a "clone" of your whole Mac before upgrading any software:

http://www.bombich.com/

You don't need to make a whole backup of your Mac, but in fact, it's recommended to make backups of your Mac onto an external drive.

For most of users, Time Machine is sufficient > http://support.apple.com/kb/HT1427 It's free and it comes with OS X, so you don't have to buy or install anything. As rmgman said, Carbon Copy Cloner is a good alternative too, but Disk Utility's Restore feature does the same

Good luck