Yes, assuming it's two instances, not one instance with an SDE and a user-schema
geodatabase (these must be upgraded together).
I'm currently running 9.3.1sp, 10.0sp5, 10.1sp1, and 10.2.0 on SQL-Server,
10.2.0 on Oracle, and 10.2.0 on PostgreSQL on my W7 laptop, and regularly
have 4-5 different Oracle and PG instances on my Linux hosts.
The thng is, Esri doesn't support multiple versions of application server instances
on Windows hosts. It can work, but you need to back up the SDEHOME, then
uninstall (without accepting the offer to remove the services) to clear the registry,
restore the SDEHOME, then install the new release. You'll need to learn to use
the command-line tools for service administration to delete the old service and
create the new (after the geodatabase itself has been upgraded, which will require
a Desktop install of the appropriate version). It's a lot easier if you're not running
an application server at all (just be careful to upgrade the correct instance).
- V