Install them in different folders, and change the port of the second instance (other than the default port 8069).

Response Added after comment.

let's take an example, assuming that you followed the steps described here; assuming also that Postgres is installed.

1- When you reach the step "move to the install directory", create the directory name according to your version (e.g mkdir /opt/openerp/v7 and mkdir /opt/openerp/v6.1) and continue to the next step ...

2- When creating the openerp-server.conf (you can rename it according to the openerp version) or you can use the same name but when copying it to the /etc/ folder , copy it in a subfolder ( /etc//V6.1 or /etc/V7 ).

3- Do the same thing for the openerp-server-log (put them in two separate subfolder under ./var/log/)

3- The Last step is to create a Boot Script under /etc/init.d/ for each instance (Look how to do it here at step 7:

Edit the scripts, and modify the lines related to the paths to the DAEMON, CONFIG, and LOGFILE, you can also choose different names for each running instance (e.g openerp-server7 and openerp-server61)

Don't forget to change the port of the second instance !!!

And remember:

The Two (or more) instances of openERP must be installed in different folders, and pointing each one to different openerp-server.conf, openerp-server.log, and init script files.

Go to openerp/tools/config.py Look for

        if os.name == 'nt':
            rcfilepath = os.path.join(os.path.abspath(os.path.dirname(sys.argv[0])), 'openerp-server.conf')
        else:
            rcfilepath = os.path.expanduser('~/.openerp_serverrc8')

And change the name of the file. In my case i'm using openerp_serverrc8 for v8

Your immediate answer is virtualenv (and virtualenvwrapper to make it even easier). Here's another good tutorial.

However, the sanest thing you can do as a developer is to use full machine virtualization. VMWare, VirtualBox, Xen, KVM and others all make it ridiculously easy. I have dozens of 8 - 20Gb virtual machines on my hard disk. Windows XP, Windows 7, Tail and many, many different installations of Ubuntu with different editions of OpenERP, Joomla, WordPress and so on.

Any experimentation I need to do, I start up a VM, mess around fearlessly, shovel anything I need to keep out to GitHub and kill it when I'm done.