Yes, it can be done. This is what Microsoft say on the subject:
"An upgrade to Windows XP Pro is a smooth transition and will not affect your
current programs or files if you use the following procedure:
1. Purchase a conventional "Retail Upgrade Version" [boxed] of Windows XP Professional.
2. Uninstall your antivirus program.
3. Perform a backup of your important documents and files to a CD, DVD, or other backup media.
4. Disconnect all hardware peripheral devices, except the monitor, keyboard and mouse.
5. While running Windows XP Home, insert the Windows XP Pro CD in the drive and select
the default "Upgrade" setup option. [Do not select "New Installation"]
6. Visit the Windows Update site to download all the critical updates.
7. Reinstall your antivirus program, then defrag your hard drive."