If you choose the "Archive and Install" method to upgrade your Jaguar system, and select X11 at the same time, the Installer _will_ archive and upgrade the X11R6 folder within /usr, but _will_not_ archive and install the X11.app within /Applications.
You'll see this to be true if, after your install, the X11.app is _still_ in /Applications instead of /Applications -> Utilities, which is it's new location.
Simple fix: Remove the /Applications/X11.app program yourself, and run the X11 installer from Disk 3 of the Panther install CDs.

