apt-get update and apt-get upgrade do upgrade the kernel and firmware.
apt-get is restricted to versions of kernel/firmware considered "stable". So if testing the 3.2.27 kernel succeeds for most people, apt-get will eventually update to 3.2.27 as well.
There's also a "bleeding edge" repository for apt-get where you can get a more recent, but not necessarily more stable, version of kernel/firmware via apt-get. Just search through this forum, I think asb has posted instructions how to enable the bleeding-edge repository. That way, you can avoid rpi-update and potential conflicts with apt-get.