LE is packaged so the entire OS resides in two files; the KERNEL and SYSTEM files in the first partition of whatever device you boot from. The storage (second) partition is only used for persistent data, and Kodi DB files and add-ons are the only content that might be touched during upgrades, so long-term placement of media elsewhere on /storage has no impact from upgrades. There is no need to delete media to make an update unless perhaps you reached 99%+ full on the disk (some space is required for update file unpacking).
Update from LE12 nightlies to LE12 future releases (nightly or otherwise) is simple and supported, and currently nightlies are quite stable; at least on the RPi hardware that I use.