Question: After creating a character using the Red Box and convincing my gaming group, all newbies to RPG's, to roll characters using the Red Box, I discovered that the Red Box doesn't seem to have an upgrade path for these characters. Is there an official or published method of leveling these chracters?

Answer: 
In the Dungeon Master's Book, the book contains instructions on how to level as per this [link](http://www.therpgsite.com/showthread.php?t=18583). If you're interested in having them level all the way to thirty, you'll need to grab the book "Heroes of the Fallen Lands".

Characters created as part of the Red Box are first level characters as presented in HoFL. HoFL presents more options to the first level character though, and so players should be allowed to retrain if they wish. Beyond that, use the level progression from HoFL for your red box characters.
Although Brians answer was very helpful in pointing me in the right direction I was still a little confused about where to go after the new Red Box and what the relationship was between books like Heroes of the Fallen Lands and The Players Handbook and Dungeon Masters Guide. The Wizards web site is extremely unhelpful imo but I eventually found out what I was after by reading a number of product reviews. I thought I'd post it here in case its useful to others.

The New Red Box is part of a product line called "D&D Essentials" that is specifically aimed at the new player, not the seasoned warhorse. The Essentials line is also intended to be a slimmer, cheaper, more portable way into D&D. The books are "gazette" or "graphic novel" size and paperback instead of the larger hardback core set. The Essentials line is compatible with Core D&D4 books but may contain different options and character classes typically have fewer options. The Essentials line consists of the following:

* The New Red Box
* Heroes of the Fallen Lands
* Heroes of the Forgotten Kingdoms
* Rules Compendium
* Dungeon Master’s Kit
* Monster Vault
* Dungeon Tiles Master Sets

The "Heroes of" books each contain 5 character class builds and 5 races. The classes builds are tailored with a specific style in mind and so have fewer option which is less flexible but prevents the new player creating ineffective characters. The Rules Compendium contains all the core rules but apparently has been redesigned so that it easy to browse during play. The other products are box sets and typically contain another map sheet, more character tokens and an adventure.

So to answer my own question the Essentials line relates to the core books by presenting a different entry point to the same system. Character generation is streamlined but fully compatible. All adventures in the Essentials line take place in the same world, the adventure in the Dungeon Master's Kit taking place directly after the events from the Red Box.