I've done this twice, both times increasing the drive size along the way. Each time I inserted the new drive into sled 2, 3 or 4 and formatted it. Once complete, I used Carbon Copy Cloner to clone the boot drive to the new drive. Depending on how GBs (or TBs) it could take a bit but as Fastsavage said, it's easy.
FWIW, Time Machine works too.