Run the prepare-for-upgrade diagnostic (WebIF Diagnostics page, top option box);
Install the latest standard firmware (for which a custom firmware is available);
Install the latest custom firmware (relevant to the standard firmware);
On the WebIF Package Management page, click "Update package list from internet" and then "Upgrade all packages".
This will always work, but it is not always necessary to perform all the steps. Finer detail is available specific to various starting points and desired end points in the Wiki: Upgrade Path (click). Firmware downloads (standard and custom, for installation using a USB stick) are available via links on the Wiki: Firmware Downloads (click).
In general it is not usually necessary to update the standard or custom firmwares, unless you desire something in a new standard firmware (see Things Every... (click) section 1) or if a custom firmware update is necessary to support a new package. My main workhorse HDR-FOX (for example) is currently on 1.02.20/2.12 (see my signature panel). The main improvement in the later custom firmwares (currently 2.15) is disk repair from a Telnet menu. The main improvement in the later standard firmwares (currently 1.02.32) is the ability to stream files larger than 4GB from an external DLNA server.
If you install the package auto-update, the packages will be kept up to date (but not the standard or custom firmwares). However, your WebIF version appears up to date, so I presume you already have auto-update installed (and step 4 is pointless).