I had two applications in the App Store. One is the free version, the other is the paid version.
I need to have a button in the application itself named \"Upgrade\".
Yes. You can hide all features in lite version those features you want to show in Pro version. Then when user click on upgrade button then on that button you write your in-app-purchase mechanism. Once user successfully purchase your up-gradation pack then un-hide those pro features in lite version. Then your app will become pro version. Now its completely depending on your logic and code skills how to hide and unhide features. See related links :-
Convert existing iOS paid app to freemium model with in-app purchase
How do I manage building a Lite vs Paid version of an iPhone app?
See first of all if you want Lite & Pro version of the Application there is no need to Upload 2 separate Applications for lite & Pro if you are using InApp purchase do the following:
What happen with this is if user will not purchase the Pro by pressing Upgrade button they can use lite version.
Hope this helps.