Question: Will XCode installer automatically update my old version or do I need to uninstall old one first? 

Sorry, sort of newbie to Mac development. Going fine with Xcode 3.2.4, but new version is out as of today.

Answer: 
The new Xcode installer will normally overwrite the older version for you automatically
I would suggest to install side by side, however, to retain the ability to run 3.2.4 should anything happen. I just upgraded to 3.2.5 and my application does not run in the simulator anymore, giving out an error as follows:

> 
> Detected an attempt to call a symbol
>  in system libraries that is not
>  present on the iPhone:
>  nanosleep$UNIX2003 called from
>  function
>  \_ZN3irr16CIrrDeviceIPhone5yieldEv in image pw2009test\_dbg. If you are
>  encountering this problem running a
>  simulator binary within gdb, **make
>  sure you 'set start-with-shell off'
>  first**.
> 
> 
> 

This is the same issue as reported [App crashes with 4.2 iPhone simulator 'set start-with-shell off'](https://stackoverflow.com/questions/4271480/app-crashes-with-4-2-iphone-simulator-set-start-with-shell-off). This issue specifically started after 3.2.5 upgrade.