Prepare the disk slice and partition for live upgrade:
disk 1 Partition:
c0d0s0    /
c0d0s1    swap
c0d0s2    backup

disk 2 partition:

c0d1s0    /copyroot

the partition on second disk (/copyroot) is same size as the root (/) partition and it must not appear in use in “/etc/vfstab”.

This example explains how to upgrade a Solaris 10 10/08 system to the Solaris 10 5/09 release. Solaris Live Upgrade has many capabilities but for a simple situation like upgrading a system to a new Solaris release, there are three commands:
• lucreate to create the copy
• luupgrade to upgrade the OS on the copy
• luactivate to choose the environment to boot

Before upgrading, you must install the Solaris Live Upgrade packages from the release to which you are upgrading. New capabilities are added to the upgrade tools, so installing the new packages from the target release is important. In this example, you will upgrade from Solaris 10 3/05 to Solaris 10 1/06, so you must get the Solaris Live Upgrade packages from the Solaris 10 1/06 DVD.

1. Install Live Upgrade package.

Insert Solaris DVD, then  from “Solaris_10/Tools/Installers” directory,  run the “liveupgrade20” command.

you can run the command without option “noconsole” and “nodisplay” if you want to display the GUI.

bash-3.00# cd /cdrom/sol_10_509_x86/Solaris_10/Tools/Installers/
bash-3.00# ./liveupgrade20 -noconsole -nodisplay

2. Run the “lucreate” command to create a copy of the active boot environment.

bash-3.00# lucreate -c solarisold -n solarisnew -m /:c0d1s0:ufs

“solaris0ld” is the active environment

“solarisnew” is inactive boot environment

3. after the new boot environment is created, now begin the upgrade procedure:

bash-3.00# luupgrade -u -n solarisnew -s /cdrom/cdrom0

4. after finished on step 3, now time to activate the new environment.

bash-3.00# luactivate solarisnew

5. init 6

Reference:

http://www.ziddu.com/download/5779090/live_upgrade_howto.pdf.html
http://www.ziddu.com/download/5779714/Solaris10LiveUpgrade.pdf.html
http://www.ziddu.com/download/5779715/Solaris_live_upgrade_howto.pdf.html

Solaris Live Upgrade 2.0 Guide:
http://dlc.sun.com/pdf/806-7933/806-7933.pdf
Solaris 10 Installation Guide: Solaris Live Upgrade and Upgrade Planning:
http://dlc.sun.com/pdf/817-5505/817-5505.pdf