The free upgrade is possible only with products starting from 2006 and onwards. If you ever try this with 2005 and older versions of Norton products, you will need to purchase the upgrade.
Here is an example.
NIS 2006 or NIS 2007 upgrade to NIS 2008 is free of cost.
NIS 2005 or NIS 2004 upgrade is not free of cost and you need to purchase an upgrade.