First there is a code written into Photoshop that allows you to install and activate PS a certain amount of times, and if you exceed that number then you run into problems where you have to call Adobe to resolve these issues, i.e. failure to boot, crashes, lock-ups, etc. These issues also are not resolved through unistalling, you actually have to get Adobe's help.
Second there is nothing wrong with having multiple versions of PS on your computer, I'm currently running CS2, CS3 and CS4. Why? One I don't use them all at the same time, but often will switch between versions as I feel the need for certain features, past projects etc. Also because of certain let's say "bug" issues with CS3 and CS4 and certain tools I'll go to a previous version when working on a deadline to save aggrivation. Just go to the Adobe web site, support, forums, photoshop, pick either MAC or PC and you'll see the numerous posts about issues, and also the number of people that have multiple versions on their machines.
Third if you decide to de-activate and uninstall a previous version you have to be extremely careful in the process, especially with related files, or else you WILL mess up your upgrade.
Fourth if you are concerned about space, and if you can, add a hard drive to store your images, and for a scratch disk and just use your main HD for apps.
Lastly if you are running low on HD space now, and if you are low on RAM I would not install CS4 till you resolve those issues because CS4 is the worst PS version ever for hogging resources, and you need a good video card with this version. Again go to the abode site and just read through many of the posts. Here is the link to get you to the page where you have to choose between MAC or PC:
http://www.adobeforums.com/cgi-bin/webx/.3bbf2764/
As a previous poster indicated you do not own your software, but rather are granted a license to use. With that in mind to reinforce what was said earlier you can't give your version of CS3 to someone else to use without some potential problems for you, if you have to re-install, and for the other person to install and then activate and register with the same serial number.
You can search and read, but to post you have to join, it's free, and you can get alot of good advise, and you can get a lot of lets say "know it alls" You'll leran who the good resources are very soon. Also Adobe Photoshop personnel, NOT THE HELP DESK people monitor and often will join in and offer help, ask you to send them your problems and will work with you. Good Luck.