I keep all of my mp3 files in the winamp folder along with the actual winamp program it's self. If I download and install a new updated version of winamp will all my mp3 files that are in the winamp folder be deleted or not? Thanks in advance to anyone that can help me.

I'd say no. Plugins, skins, etc are not lost in the process. Files are just overwritten when you install a new winamp over the one you have. So your MP3's are safe.

You shouldn't keep important files stored in a program folder. If anything wrong occurs, for instance when trying to uninstall the said program, you might lose all your files.
Move all your mp3s to a safe directory on your hard drive (e.g. c:\my music) and then upgrade Winamp.