Need help in Upgrading My HTC Magic from Android 1.6  to Android 2.3?
Sankar,

There's some speculative chatter on the internet to suggest you'll have a hard time running 2.3-Gingerbread on first generation Android devices (such as the HTC Dream and the HTC Magic). It looks like some folks on XDA are working to port the OS but you're definitely looking at CyanogenMod in that case. Which means that ...


  Yes: you will have to root your phone
  to upgrade your OS.


It also means that you might consider doing something a little less drastic, like upgrading to a somewhat more stable ROM. (Especially if the idea of rooting your phone is giving you the willies!) @matthew_read tipped me off to the ROM Bible which is a great place to identify ROMs that other HTC Magic users have successfully installed. The ROMs there will still require you to root your phone, tho. 

Check out the HTC Site to see if they have any supported updates though -- it looks like HTC India does offer at least one ROM upgrade for the Magic.