I've got V4,5,6 and 7 on the one machine. Only the point releases are updates. Just install each full version and it doesn't overwrite the previous version.
I believe you can only have one copy of a major version on at a time. This is because each major version (i.e., 6, 7 ,8) installs into it's own folder. So you can have Vegas 7 & 8 Pro but not 7d and 7e. If you try to install 7e after 7d it will automatically update the 7d version (as you would normally want it to do).
I have Vegas 5, 6, 7 & 8 Pro all on at the same time but only the latest version of each.
Funny, I just removed 7. I found that 8a is now reliable enough to stand on its own.
Having said that, I found 7d and 8a to be sound and stable (I do mostly HDV work) and 7e and the original 8 to be a little whacked... they seem to carry the same bugs with regards to HDV work.
Vegas does offer the option to choose the installation directory. After installing 7.0 in the C:\program files\Sony\Vegas 7.0\ directory you could install 7.0a in a directory named Vegas 7.0a\ and then 7.0b in a directory named Vegas 7.0b\ and so forth. I don't know if this would work, but i'm sure you could try it.