Hi Friend,
Yes you are right. OS will be loaded in to RAM from the default system partition when ever we boot the Controller. where as windows OS is very big in size and will have number of modules hence only a module which is required handle task will be loaded into RAM thus they are little slow compared to Controllers, Switches and any other networking devices.
Therefore as Colin said, we can upgrade the OS in any of the partition but recommended is partition 1( backup) because we want we can revert back to the older version.
Hope got some clarity on this. please feel free fi you need more clarity on this.