Glad you got that fixed! This was my first time rooting as well, but I thought it went very well and was pretty easy. The hardest part was figuring out why I couldn't log into Google and how to resolve it, but getting Cyanogen on the phone was easy.
DM Updater only got me to Droid Mod, but ROM Manager got me to Cyanogen from there. When I tried to use DM Updater to go back to Stock (while I was freaking out), it kept saying my SD Card was not mounted to the phone. Then I found out there's a big workaround to get that fixed. Well now, ROM Manager does everything DM Updater can do, and then some; like the fact that you can install lots of other mods from there.
I'm not sure if upgrading Cyanogen is incremental, but from what you're seeing I would say it is. If you haven't already, install the 5.0.5.3 from ROM Manager, it's really easy. Just click on it in ROM Manager and check off Google Apps when it pops up. Then it will download the update, which you can see in the notification bar. Next it will pop you back into ROM Manager and give you a warning I think, ask if you want to backup (I would) & wipe data (you don't need to check this), and then ask you to hit OK to reboot. Once it reboots it's automated. It will go into recovery, unpack and install everything, and then reboot back in the normal phone. And BAM! You're updated. I think it takes about 3 minutes or so.
And yeah, I went ahead and bought My Backup Pro to backup all my data. That worked great! It even backed up my Note Everything notes and OIShopping lists.
If you haven't yet, check out the website
Droid Life: A Motorola Droid Blog. It's a great site with a lot of useful information and How To videos. You can find videos on here about using ROM Manager to update Cyanogen if you're a little nervous.
I have a friend with a iPhone 3Gs and he was thinking about Jailbreaking it. We tried looking up some information but it seemed a little confusing. And all the warnings on the websites made him nervous. I tried to explain that the warnings are no different from the same things I saw doing this.