I would not recommend you to upgrade yours to Ultimate because most netbooks processor works very slow with it so it's better to stick with what you have for now...
Back to topic.
Recovery partition is important because in case your Windows is failing (beyond repair), you can always recover it to out-of-the-box state from that partition so deleting it is not pretty much not recommended.
You can use either use Disk Management from within Windows itself or use Gparted. Gparted is linux-based program and it can be use as live cd. If you think system drive (C:) is not worth for 200+GB, just shrink it to preferable partition size.
After that, you'll have some unallocated disk space that can be used to create another partition. (be wary that usually a hard drive can support up to 4 primary partition only) After done through the process, you'll encounter chkdsk when you start your windows, let it run to correct the MFT files and it should be fine afterwards...
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