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is it possible to create a checkpoint or something like that while doing system updates etc so that we can rollback to previous state if there is a problem?
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Thats a Windows feature, in Linux, you have log files in /var/log that will tell you what's what with latest installations. Unlike Windows, you'll have to get adjusted to reading and writing if you're gonna work with Linux.
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what should we do if linux freezes while doing system upadate or something like that.I did a reboot in ubuntu and system became unusable
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Stay away from cutting edge distributions like Fedora and Ubuntu or Debian Lenny, go with a stable distribution like Mandriva, RHE or Debian Etch.
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if we update fedora9 with lot of tools to 10 using yum/preupdate will it work or will it become unstable?how steps to take while updating,like backup etc?
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Due to your obvious fear, you should stay away from cutting edge distributions that get many updates every day/weak/month, unless you have nothing better to do with your time, allocate lot's of time if you plan on messing with two versions of Fedora.