As a test I just activated 3.5.3 and my blog posts were missing so I suspect something in WP 3.3.2 doesn't play well with older versions of Atahualpa. 3.6.x and later work fine. The big difference is that you can't add php code (other than for new widget areas) to the theme options and the above and below the loop boxes are gone as well.
If you do an upgrade most of your settings should be OK but you should do a backup first. Also remember that when you upgrade the header images, favicon, and other images you have uploaded to the theme folder will be gone. We generally recommend the manual update so that you will at least leave your current files in place. Here are the instructions
for a manual install of the new theme.