That will work.
In general you need to upgrade your database to the lastest compatible version for the OpenACS version that corresponds.
For example you'd upgrade OpenACS to 5.7 then upgrade PostgreSQL to PG 8.4.
Then you can upgrade the database to 9.x and upgrade OpenACS to 5.8 (HEAD).
Of course if you don't mind editing the upgrade scripts so they run cleanly you should be fine either way.
Due to the way Postgresql handles backwards compatibility (or doesn't...) this is the only technique that works reliably.
