when it asks you if you want to update, type Y for yes.
Assumptions: esri_sde is the name of your ArcSDE service, sde is the name of your sde account, password is your sde account password
Ok, after some consideration, this might not be your problem. This fixes orphaned gsrvr processes which would result from ArcIMS or ArcGIS Server connections that time out. You didn't mention either of those products, so this is probably bad advice. Forget I said anything.
Thank You all for the suggestions. We have all direct connections. I do have a TCPKEEPALIVE param to TRUE for each service.
I did not see any error in ArcSDE or SQL server logs. We have trace enabled at lower lever as you mentioned. Interestingly the error, i am seeing is in ArcGIS Server Logs and its very intermittent (most of the time, it happens after SQL server DB backup nightly jobs).
If the connections are being terminated from the database side during a backup script, it's possible that a restart of the database is severing the connections.
Are you sure you want TCPKEEPALIVE enabled? It adds network overhead to the communication protocol to detect the difference between a quiet connection and a hung client, and terminates the connection when timeout is detected.