There's lots of us done this - generally no problems but a lot of swapping around in the process. Firstly install your new drive as a slave to the old one (set as master). Normally put both on the same IDE 1 cable. Format the new drive as necessary.
Then there are a couple of routes you can follow. The (apparently) easiest is to use Ghost or similar to clone your old drive (as master) to the slave and then swap the two over by altering the pin settings. Your computer will boot from C: unless you tell it otherwise.
However, my preferred method (which results in a clean system but takes a little longer) is to start again by coonfiguring your new drive as master and disconnecting your old drive completely (to protect the data). Install your OS, drivers, and programs on the new drive and get your system working OK. Then connect your new drive as a slave and transfer what data files you wish over to the new master. When you are happy that all is OK and running smoothly, then format your old drive. At that stage the transfer becomes final - you are protected to that point if things go wobbly or you have lost some of your program disks. Then install whatever you wish into your old drive as slave. You only need your OS on the master.