Dear Raj
Technical Upgrade - These are the upgrade which has only a technical impact. For example a Java Patch level upgrade or SP upgrade where in only the changes happens at ABAP library level. For the users there is no impact on the functionality which he is currently using
Functional Upgrade - Are those upgrade where there can be possibility of changes in the existing functionality , new functionality getting added. This comes along with any technical upgrade
Let me explain you with another example suppose you are upgrading ECC system from 6.0 to 6.0 EHP5 . If you are going to do the upgrade without activating any new switch framework that upgrade is just a technical upgrade. But if EHP5 upgrade is done along activation of new fuctionality it becomes technical as well as a functional upgrade.
Regards
Gajesh