Is it not possible to completely isolate the two different versions? (Something like virtualenv for PHP?)
The actual problem is more complex: you always have the conflict between wanting users to use the latest version (because of security issues or stuff like that) and not breaking the software they're running.
Anyway, i fully agree: providing hosting is a hard business. Imaging what 1and1 needs to do for this huge server farm... wow. It's ok for a lot of low traffic sites without much functionality, but in my case I needed more at one point. Now I have the choice between 5.3 and 5.4. Thats neat.