Yes, we recommend that you uninstall the free version of TweetCaster for Android before you download and install the paid version, UNLESS you have purchased the app via the in-app purchase ("Go Pro").
In that case, purchasing in-app does not "unlock" Pro in the Market, but turns your existing app into Pro (and if you reinstall free, it automatically turns to Pro). Ads are removed from your existing installation and you don't have to reinstall.