If you install to a different directory it will coexist but you can only use one at a time. The best option is probably to rename the original Mach3 folder to Ver263Mach3 and then install the newer version to the default Mach3 folder.
Whether you should upgrade is up to you, if everything works well and you have no problems and can do all you require then maybe you should just stick with the older version. Having said that if you rename like above its easy to go back if you find you have issues.
Hood