• Download a fresh Firefox copy and save the file to the desktop.

• Firefox 3.6.x: http://www.mozilla.com/en-US/firefox/all-older.html
• Firefox 4.0.x: http://www.mozilla.com/en-US/firefox/all.html

• Uninstall your current Firefox version and remove the Firefox program folder before installing that copy of the Firefox installer.
• Do not remove personal data if you uninstall the current version.

Your bookmarks and other profile data are stored elsewhere in the Firefox Profile Folder and won't be affected by a reinstall, but make sure that you do not select to remove personal data if you uninstall Firefox.

What happens if i just install the program w/o uninstalling the older version of firefox? Will it install over the current version? Is what you are suggesting the best approach? I just want to make sure i don't lose any settings.

I recommend using the instructions posted by cor-el, but you can if you want install it over the current version. You will have your current settings using either method.

Yes. The new version will install if you will install the Firefox 3.6.17 version over the top of the current version or update via Help > Check for Updates. There are rare cases where it doesn't work and in some cases you may be left with an entry of the old version in Add and Remove programs if you do not uninstall the old version. That is the main reason to advise to uninstall the the old Firefox 3.5.x version.