Two iPhones, one household: Installing iOS 5 without obliterating data
You don't mention if they're on the same computer. I am in a similar situation, two iPhones on one iTunes account, except we each sync to a different computer. I expect (based on the note above) to be able to upgrade both two iOS 5 and use two different iCloud accounts. As our data currently lives separately on two computers (Snow Leopard), I'm optimistic that we won't clobber one another. Perhaps this is an option for your friends?