Sorry if these are obvious, but maybe they'll help you look at a variety of things:
Do you have a good internet connection? Package lists are downloaded and compared first before upgrades happen. Bad connection may cause hang.
Do you have a CD or DVD that you could reinstall just the package manager from?
Is this the ONLY problem you're having with the system?
Did you check the appropriate boxes where it asks for what sources to draw packages from? I assume yes if you've got the previous version but like I said, better to ask than to overlook.
Try the other update method - if graphical then try apt-get, or vice versa.