installation of nios II 5.0 Full edition

Yes, the version went from 1.1 --> 5.0 to keep it the same as Quartus. Nios releases are now synchronized with Quartus and this makes it simpler -- one box is shipped to you with the latest release of everything.

As for multiple installations, yes those are allowed and the above post about environment variables is a good suggestion. However, you should be careful to install both Nios & Quartus installations in different folders. For example, my tools are like this:

c:\altera

...nios2_1.1

...nios2_5.0

...quartus2_4.2

...quartus2_5.0

just ensure that those are separated. Installing "on top" of an existing folder will probably break things and is not reccomended (the installer should tell you this as well).