A: System Center 2012 Data Protection Manager can be upgraded in-place to System Center 2012 Data Protection Manager SP1, provided it's running on Windows Server 2008 R2 SP1.
Before doing the upgrade, make sure Update Rollup 2 is installed, which is available from the Microsoft download site. Also, back up the SQL Server database used by Data Protection Manager (DPM) prior to the upgrade. Run the SP1 setup, and the in-place upgrade will be completed.