As we age, joints grind and make noise. It's called "crepitus. " Crepitus in the cervical spin is very common since that part of the spine gets a lot of wear.
In short yes. Cervical instability means that you have some type of defect or trauma in your cervical vertebra causing "instability". The grinding or cruching noises are areas of bone rubbing on bone.
There are every possibilities of crunching noise due to cervical instability. It would cause severe pain when lowering or turning the neck to any position. The overall cervical condition cause the crunching noise. In this situation of movement of spinal vertebra would lead to spinal instability. This may also be due to rheumatic arthritis.