I am using php4, is there any problem using php5 for my applications?

This can be correctly answered by the developer/vendor of your web applications. If they say that the application will work fine in php5, then you can switch/upgrade to php5.

Any application developed for php5 specifically should of course not work in php4, but there is a high probability that an application developed for php4 may work in php5 if it does not use any functionality that is obsolete or deprecated. But again the developer/vendor can provide you a definite answer.