Doing the upgrade from ArcCatalog was new at 10.0 (previously upgrades were done with 'sdesetup',
which would have had to have been updated before the upgrade could proceed). If your clients are
all Direct Connect, then the status of the application server build is less significant, but the application
server should certainly be at the same release as the RDBMS.
Sometimes my "terse" responses are interpreted as "gruff" -- I'm glad I could help.
- V