Here is a short example that show you the new way to work with upgrades to your schema:
The full example I have on github that show the differences between WebSQL and indexedDB still uses the setVersion syntax. However, in Firefox 10 (and in Chrome 21) you should change your code to work with the new API. Good luck!
[Update Sep 2012]
In case you wish to see a code that will work fine both on Chrome (that still need to update according to the spec on onupgrade) and Firefox you can check this example of jQuery mobile and indexedDB mobile app: