I currently don't have access to Internet at home, so I have to download Karmic Koala ISO (via torrent or direct download) and install it offline. And such luck is not on my side, my CD-ROM isn't working quite well lately. Good thing I learned that I can upgrade without using CD. How is that?
First, I needed to install gMount ISO, which comes-in handy in just 16.2 kB of download.
After installing gMount ISO, access it from Applications -> System Tools-> GMount ISO
Next, just mount the Alternate ISO to /media/cdrom0.
Then open a Terminal (press Alt+F2 or access it from Applications -> Accessories -> Terminal) and type in:
Just follow the remaining steps and your Ubuntu will be upgraded.