To upgrade an installed package to its newer version, run the package installer tool with the --upgrade option. With this option, you don't need to care about uninstalling the older package and restarting Parallels H-Sphere before updating the package.
To upgrade a package:
java psoft.hsp.tools.PkgInstaller --package=/path/to/package/file --upgrade
The package files will be installed to the ~cpanel/shiva/packages/PackageName directory, where PackageName is the name of the package without its version and build number. For example, after installation of the MyPackage-1.0.1-2.hsp package its files will be stored in the ~cpanel/shiva/packages/MyPackage directory.
To ensure the package is upgraded, check the Settings->Packages menu in admin interface for the package version and the package files installed.