you don't upgrade kernel
you can have multiple kernels installed
open synaptic package manager, press reload button, mark all upgrades and apply
after that press the search button and write kernel then press enter
from the list of results you will find multiple options
around 15 options between older and latest versions are available kernels
you mention you have the oldest that came with the first livecd, 2.6.33.7, there is older and newer versions
currently we have the most recent, 2.6.38.2 in basic version, bfs, a64, pae and bfs pae
in your case you can use the a64, the basic one and the bfs, the others won't help you
install both(you can have up to 6 afik), don't remove the one you have now, to have it as a lifesaver if the new kernels refuse to boot
this process will add to your boot menu two new entries(or as much kernels you add), each one named with the kernel installed
all you have to do is select the new kernel and press enter, the first time a new kernel is used will take longer to boot, you can press the esc key to see what is doing, it adds new modules to the new kernel
this can take up to 5 minutes or as little as 30 seconds, depends on the amount of modules and the speed of the cpu(our case is slow atoms

)
at the end you can log to the desktop and compare results
it could be useful to reconfigure sound card by using pclinux control center or by running the command alsaconf in konsole
another reason to have problems with sound is the presence of pulseaudio, do you have it installed? there is multiple posts mentioning problems and solutions, do a search about that topic on this forum