It will be best if you can back up your images, groups, and host lists, then do a complete uninstall. From what I’ve seen even if you get an ‘upgrade’ install to work from 0.32 to 0.33 at this stage, it will be a mess and have a lot of leftovers. After you install 0.33 you should be able to port your images back in, and import your lists. You will also have to recreate your PXE menu. Perhaps before 0.33 goes release Tom will add a built in upgrade, but considering how different the new system is, it might be better for everyone to only grab what they need themselves.
And as for your OS, it should still work, but I would strongly urge your to use a newer release if at all possible.