The following info is also found within the readme.txt file.
upgrading from v1.x to v1.4 backing up your projects: To carry your kernel projects forward to the new release, please backup
the <project>/build/.config file to somewhere safe.
To carry forward filesystem and application projects, please backup each
project directory to somewhere safe.
All projects can normally be found in:
...altera/kits/nios2/bin/eclipse/workspace
upgrade procedure: (1) Uninstall Nios II Linux v1.x.
(2) Follow the upgrade procedures for Quartus II v5.0 and Nios II v5.0
(3) Install Nios II Linux v1.4
restoring a kernel project: (1) Create a new kernel project using the instructions found within the Quickstart Guide. The procedure hasn't changed at all since v1.0
(3) Configure the kernel taking all the defaults.
(2) Copy over the .config file that you backed up earlier into the project's build directory.
(3) Start up Nios II SDK shell and run:
$ cd $ECLIPSE_WORKSPACE/<kernel_project>/build
$ make oldconfig
When prompted with new options, select "no" for any new ones that show up. In the case of multi-answer options, using the default value should be safe.
(4) From within the Nios II IDE, try rebuilding the kernel using the build project option.
restoring filesystem projects: (1) Copy the project directories back into the main workspace directory that you selected when starting up the Nios II v5.0 IDE.
From the Nios II IDE:
(1) Select File->Import... from the pull-down menus
(2) Select "Existing project into Workspace" from the list of options
(3) Click next.
(4) In the next page, select: "Browse..." and select the project directory with your filesystem project.
restoring application projects: (1) Create a new Application Project using the Nios II IDE.
(2) Copy all the relevant C Source files and Makefiles into your new application project and build.