i'm betting that, like many roms, Pandora is a system app for Sapphire. if so, that is the reason it won't allow the update to install. if you really want the update, you can delete Pandora as a system app in one of 3 ways:
the easiest way is thru root explorer. go into system/app, and then click the "mount r/w" button (to change the system files from read only to read/write). then find the app, long press on it, and then hit "delete". then push the "mount ro" button to change back to read only, exit out of root explorer and then reboot (this is important to get the change in system apps to "take.") when you boot back up, you should be able to install the app from the mkt, with the update.
the second avenue is thru Terminal Emulator. type in:
su
sysrw
rm /system/app/[name of app].apk
sysro
reboot
again, it's necessary to actually type in "reboot" and enter, to get the change to take.
finally, you can go into the rom zip file, manually delete/remove the app, and then reflash the newly configured rom zip file w/o the system app. then you should be able to dl the updated app from the market.
Word of warning: if you are running a theme, the themed app is for the version that is contained in the rom. If you delete the app in system, and then update from the market, you will lose the “theming”. But, you may be able to go into the theme zip file, extract the app icon, and replace it on your updated app.