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
Considering that Xcode now supports installing versions side-by-side, I would suggest installing Xcode 3.2.5 in a folder called Dev325 or something and try it out first just to make sure. It's unlikely you will experience a problem, but it has been known to happen. Then, once you have used 3.2.5 for awhile and are comfortable that it is working correctly, uninstall 3.2.4 - *About Xcode.pdf* will tell you how to uninstall properly.