The latest 8.4 version is probably the best choice, although 8.3 is supported by PT3 as well and we have quite a few people using 9.0 as well without any report of problems (me included).
You need to make a backup of your database(s) before updating – different major versions are not compatible without doing a backup/restore.
Your PostgreSQL username is almost certainly "postgres", and you could try "dbpass" for the password, but otherwise you can remove the need for PostgreSQL passwords:
How To: Remove PostgreSQL Password (although that tutorial is for 8.3 and it may be slightly different in 8.2).
If you're going to uninstall 8.2 then you may not need it – when you install the new version that will be set up again.
PT3's built-in Backup/Restore mechanism will store all of the files that you need after you re-format.
Tutorial: Backup and RestoreI would suggest that you keep copies of all of your original hand history files as well, that will allow you to recreate your database should it ever be necessary.
When you make a backup now (using 8.2) does it say that your database has been backed up, or does it say that you need to update PostgreSQL before using the backup mechanism? I think that the backup should work – in which case, that file is all that you need. Before you uninstall (or format) anything I would suggest you try restoring a database from that backup, though, just to make sure.