This really bugged me until I found the solution so I thought I'd share it here.

When you create a Visual Studio Setup project all is fine for the first version, it builds your msi, you distribute it and it just works.

When you come to distribute a new version however it detects the previous version and forces you to uninstall it manually before installing the new version.  Very frustrating.

The solution to this is very easy, just not very obvious.  In the Setup Project Properties you have a Version property, just up the number in here. Major, minor or revision all work.

When upping the version it will recommend changing the Product Code which is a GUID in the project properties.  I always specify yes to this.

Do this each time you build a release copy of your installer and all will be fine, no more prompting to uninstall.