Star Alliance - Can I upgrade a *Alliance award after booking?

I booked a Star Alliance flight USA to Europe in Economy (60,000 points roundtrip). I've now accrued 40,000 additional points in my frequent flyer account. According to the charts, Business class to Europe is 100,000 points roundtrip.

The flight is with Lufthansa, the frequent flyer miles are USAirways.

Can I upgrade my existing booking from Economy to Business by calling and redeeming the 40,000 "new" miles? If so who would I contact to upgrade - Lufthansa, *Alliance or USAirways?

You can't upgrade.
You need to call US Airways.
Cancel the existing reservation. Put he miles back in your account and then book the new one.

One amendment: good agents can "hold" the business seat(s) while canceling and redepositing the coach seats.