First the reason you are getting the update notifications is that very soon avast will be ending support for avast 4.8 as avast 5.0 has been out for almost 11 months and 5.1 is not far off being released. So the clock is ticking on 4.8.
The update options are the same in avast 5 as they were in 4.8, Auto, Ask or Manual for both virus definitions and Program, see image for default settings, which obviously can be changed. Why you would want to have Ask for virus definitions updates and not Auto is unusual when they are incremental and measured in KBs rather than MBs, but it is your choice.
The contents of the old virus chest will be history if you uninstall 4.8 or install avast 5 over the top of avast 4.8. Essentially there shouldn't be anything in there that you need, any old stuff three weeks or older, if no adverse effects are experienced in that period should be scanned and deleted from the chest if they are still detected anyway. So there should be nothing in there that you want to keep.
So you can either download avast5 and install over the top of avast 4.8, this retains your existing registration info and period, uninstalls avast 4.8 and installs avast all in one operation.
Or you can elect to do a clean install of avast5:
- Download the latest version of avast, 5.0.677
http://files.avast.com/iavs5x/setup_av_free_eng.exe (English only) and save it to your HDD, somewhere you can find it again (if you didn't save your last download). Use that when you reinstall.
- Download the avast! Uninstall Utility, aswClear5.exe
find it here and save it to your HDD (it has uninstall tools for both 4.8 and 5.0).
- 1. Now uninstall avast! (using add remove programs, if you can't do that start from the next step), reboot.
- 2. run the avast! Uninstall Utility from safe mode, first for 4.8 if previously installed and then for 5.0, once complete reboot into normal mode.
- 3. install the latest version, reboot.