i've never done a 3 node cluster, but with our 2 node it's always like this
fail over to one node
upgrade an instance
fail over to the other node
upgrade the other instance
make sure you have checked workstation tools and SSIS if you need it on both nodes so the local files get installed on each node
in your case i would fail over to the third node and upgrade the last instance
for SP2 i would do the same thing, but i found that it upgrades everything on all nodes so the failing over would just be verification that all the components were upgraded