I wanted to know if there are any significant improvements in how the X series of Sonar (1,2, or 3) handles hardware. Specifically whether it handles multi-core CPUs better or not.
 
The other thing I wanted to know is if one can upgrade from Sonar 8.3 (or 8.5) to the X series or if you have to purchase the full retail version.
 
Thanks

SONAR uses multi-core processors very well. No version of SONAR can control is how third party plug-ins use the CPU. There is a trial version which should be used to set expectations.
 
All registered Cakewalk customers can upgrade to X3 at a discount.

http://www.store.cakewalk.com/b2cus/ProductInfo.aspx?productid=10-CXSS3.00-30E
 
I recommend you go with this deal. For $99 you are 90% at the top of the game with X3 Studio. If you go in and check the features list there is only a few plug ins missing from studio compared to Producer, you may or may not need them. I don't. 
 

For my application I don't think I even need Studio, Producer was way overkill. I need at most 24 simultaneous tracks, and I mostly just use the Sonitus plugins.