Install/transfer from local PC to web server

I developed a wordpress site on my local PC. I am now ready to take it live on a web server. I have a few questions:

1. My local version is 2.6.2, the Server version is 2.5 Do i need to Upgrade both to the new 2.6.5 or can I just upgrade the server?

2. When I installed the server, it setup WP in a sub folder called wordpress. So now the blog shows as https://xxx.xxx.xxx/wordpress. Should I have installed it right at the root so that when I direct my domain name it appears without a subfolder? (I will be directing my domain name from a 3rd party dns provider)

Well, I guess thats just 2 questions. Thanks