We did the same a few months ago with one of our products. No one complained yet so I guess people seem to accept it.
Though we left the old version in the app store (with a warning in the description for new would-be customers) so people can re-download their old version.
I think it would be better to move your older version to free or very discounted, and put up some alerts when they start the app (and before they purchase) telling them about the new version. Tell them how to migrate their data, if they have any. And be on your way.
You can do this, but I'd advise against it. I did this with one of my apps and have received quite a few complaints from people who can no longer find it by searching.
It seems to me that quite a few people don't know about the the Purchased list.
Though we left the old version in the app store (with a warning in the description for new would-be customers) so people can re-download their old version.