Hi Anand
You can have same SAP Sid on two different systems, but both systems should be in different network (Private network which is not communicating any other SAP or Non SAP systems)
1. For OS/DB migration. First take the Production system copy (Heterogeneous system copy method) export, do the import in new hardware with New OS / DB different SID or your SID = SBX SAP version EHP5, because all other system you may have some many pending transports / Development are there in different stages. Once you are migration in to new OS /DB you can check the basic function level testing as same amount of production system
2. Once the system imported then starts the upgrade from EHP 5 to 6 or 7, before that check the PAM & SAP Notes for interoperability with other systems
1388258 - Version Interoperability within the SAP Business Suite
1737650 - EHP7 for SAP ERP 6.0 SP Stacks - Release & Information Note
3. Once you are competed the upgrade process then you can starting upgrading from DEV, if possible keep the old DEV system till you are going to upgrade the live production system. In case if you want to do any development during the upgrade period you can use the old Dev system and transport the requests to production system
Regards
SS