Once you unpack the Cordova .dmg file in the distribution, read Cordova Upgrade Guide.pdf and other help docs that come with your distribution.

THE REST OF THIS PAGE IS OBSOLETE

1. Create a new project
2. Copy your files into the www folder EXCEPT the phonegap.*.js files
3. In your index.html, edit the script tag to point to the new phonegap.*.js file
4. If you have plugins, copy them to the Plugins folder then re-add them in Xcode (NOT as folder references in blue, they should be folder groups in yellow). 
5. Modify PhoneGap.plist to add your plugin mappings. More info here
6. Modify PhoneGap.plist to add your iframe external urls. More info here in the README FAQ
7. Other issues please see the iOS README FAQ  or the older iOS FAQ
8.  

NOTE: If you don't want to migrate to a new project (migrating is HIGHLY recommended), you need to copy PhoneGap.plist from the new project into your own project, and the phonegap.*.js files, then modify your index.html script tag