Updating the Theme

I’ve just seen that I’m using an old version of the Directory theme, so have downloaded the new version – problem is when I try to upload the new theme, I get an error message telling me that the folder already exists.
Thus, I think I’m trying to update in the wrong way – can anyone help me with how to update the theme – preferably without deleting the existing theme first (as this tends to mess things up big time as I discovered once before)?