we have successfully tested our latest Melodyne versions with Nuendo 5. See here
If you encounter any crashes during the analysis process, then very likely you are either running out of memory or your buffer size is set too small. Please see this thread
for details. If possible, run both Nuendo and Melodyne in 64 bit.
Installing over the older version should be okay. But if you find that this causes any problems, you can still go through the uninstall/reinstall routine.