I want to integrate In-App billing in the free version of my game, to allow user purchase the full version from the free version itself. I already got In-App billing working and I could easily make additional items in game available. The problem is I don't know what to do to start download of full version of the game and to actually purchase the full version from the market.
To the best of my understanding, you can't use IAB to purchase a different application (full vs free). It's only used for purchasing 'items' for that particular application. What you could do is use it to:
I'm guessing 1 and 3 will be most popular. 2 requires separate server for content, but once you have a server you can also better secure your purchases (have the server run the verify step, so your public key doesn't exist inside the app), and the content could be 'server-signed' for just that device/user-account (or something similar, so can't just copy content to another device).