So the other other day I'm chatting with a buddy of mine that works at a company other than Microsoft and he says:
"Hey J.C., we have an SMS 2003 SP3 infrastructure and we also use the OSD Feature Pack across all our sites. Based on what you've told me and what I've been hearing from some of the other folks in the industry, we want to upgrade everything to Configuration Manager 2007. Can we do an in-place upgrade? Since the upgrade may take a while to complete, is it OK if we have a mix of SMS 2003 with the OSD FP in some sites, and Config Manager 2007 in other sites?"
Since it seems I get some variation of this question at least once a week I thought I'd post my answer here. Yes, you can upgrade from SMS 2003 SP2 or SP3 to Configuration Manager 2007. You have your choice of doing an in-place upgrade or side by side. There's one catch though, in that you must uninstall the OSD Feature Pack prior to the upgrade. Configuration Manager 2007 includes that functionality so you don't need the OSD Feature Pack (FP) anyway. Configuration Manager 2007 also supports child sites running SMS 2003 SP2 or SP3 so you can stage your rollout any way you like.
For more information see Configuration Manager Upgrade and Interoperability Planning and Deployment.
Hope this helps!