Will upgrading overwrite these applications and cause me to have to re-install them or set up my MIDI controllers again?

It could. V2 is a separate installer, so it doesn't actually overwrite V1. In the beginning days of V2, I had both versions installed. Reason being, if you open and save a V1 song in V2, you can't reopen in V1. There is a pop up reminder to this when you go to save. As far as setting up controlers, I think you can copy the settings over from the V1 folder to the V2 folder.

Will it be destuctive of songs I've already recorded?

Only in the way mentioned above regarding saving.

Also, is the version of Melodyne in S1 version 2 the full version?

You get a license for "Essentials". You would be missing polyphonic editing, which comes with "Editor"

http://www.celemony.com/en/melodyne/functions

Thanks, Matt...I appreciate you taking the time to reply. Do you know if Melodyne Editor is compatible with Version 1?