I would suggest you install Elements on your current computer and let it convert your Album 1 catalog. Then use the backup and restore functions within the Elements 3 Photo Organizer to move everything to your new PC. The backup process backs up your catalog, photos, movies, audio, captions, creations... all of it! When you choose the restore function, there is an option to restore to a new location (your new PC) and you also have an option to maintain the same directory structure that you had before.
For folks that aren't getting a new computer, there is no need to uninstall Photoshop Album or an older version of Photoshop Elements before installing Elements 3, although you can if you want to. I suggest leaving the old version on at least until you are familiar with the new version. Other than the fact that Elements 3 can detect your old catalog and convert it, the programs are entirely separate. Once you convert your catalog, however, you'll want to do all your organizing tasks in the new Photoshop Elements 3 Photo Organizer because your newly converted catalog will only be updated with changes you make in the Photoshop Elements 3 Photo Organizer.
For more on this topic, see the following Adobe support document: Photoshop Elements 3.0 interaction with Photoshop Album.

