Yes, you can do either an "Upgrade Install" or an "Archive and Install." I recommend the latter between those two choices.
When upgrading to a brand-new system (like 10.4 to 10.5), I am a big proponent of erasing the drive and installing the system clean and fresh, then taking the time to reinstall all my applications and restore data from backups. Much less chance of lingering bugs or problems being carried over to the new system.