That way you can come back to your previous version if anything goes wrong. So far, no one told me that they had a problem upgrading. Although version 2.x did not have any schema, the new module may modify nodes and generate incompatible tags.
Version 3.x has a new theme() scheme. It is much more powerful has it allows you to create your own header numbering, etc. However, if you already had a theme() overload in your theme, it will stop working until fixed.
Please, in this case, make sure to upgrade on a test system and see how and whether changes are required.
Please, follow these steps one by one.
1. Did you make a backup of your database?
2. Disable the module from your website1
3. DELETE your existing tableofcontents folder
4. Extract the new version of the module
5. Enable the Table of Contents module on your website2
Enjoy!