[Q] Xperia neo V - upgrading android topic

I have a Xperia Neo V - which is now spare and decided it would be good to use as a running phone - with a running tracker app on and music app.

However Android is really old on it (2.3.4). OTA updates say it is the most up to date version.

I've started to read into a lot of what I need to do and so far I have...

unlocked the bootloader - using the wire trick.
rooted the phone

I installed CWM from the playstore but from what I can tell it isn't the best way due to being on the system partition?

What I'm not sure about is how to actually upgrade the firmware. Most of the latest versions state that they need the partitions moving around to work. Also is it worth going for Lollipop or would it be better with kitkat?

I'm just after something that will be familiar compared to the other devices in the house and will be maybe a bit quicker and stable.

If anyone can give me a bit of a dummies guide to doing the next part it would be really appreciated.

Thanks