The Series 1 XBees can NOT run the ZigBee protocol. You must have the Series 2 XBees to run ZigBee.
You do not need to update the firmware to get Series 1 XBees to communicate. The 802.15.4 protocol works perfectly for simple communications. You just need to set-up a few parameters.
Download and read the XBee document #90000982. Also, dig up the thread in this forum titled “Better XBee Documents” that contains links to info on using XBees. There are other threads here about using Series 1 XBees, go through this forum and read them.
Very special thanx for this comprehensive Answer. Later after writing this post I had realised that I own the series 1 modules. Unfortunately I was buying a book which had a lot of examples for zigbee.But anyway, I will read these other documents and try to learn how the communication works.