Project Server is installed on top of SharePoint both in 2007 and 2010. You cannot upgrade the SharePoint server that has Project Server on it without upgrading the Project Server instance.
If however the Project Server is on a SharePoint server that is not in the "farm" then it is possible to upgrade SharePoint without upgrading Project Server but this means that Project Server is on a separate machine from your other SharePoint servers and that they are not joined to the same farm.
