Nitish, if you install both database versions on the same machine, you have to do a little trickery to make sure you're using the right database.
Usually, you have to make the new database listen on a second port, and then make sure the PGPORT or something like that is set correctly.
This is described a little in the documentation under the 4.6 - 5.0 upgrade, so that might be worth looking at.
However, I'm not sure you have to keep both versions on your system. I believe the upgrades from 7.3.2. to 7.3.4 won't require any dump and restore or anything, so you don't need a separate database.
