Kristen... I got the same behavior. it seemed to be because I had *two* kernel versions installed, 2.6.27-7 and 2.6.27-11.
the 2.6.27-11 version had been installed (badly) before I fixed the mkinitramfs program, so the symbolic link to it from /initrd.img was broken - this seems to prevent other kernels installing properly. I fixed it by running 'sudo dpkg-reconfigure linux-image-2.6.27-11-generic' (note the '11'), which built the correct files, and fixed the link. after that, apt-get dist-upgrade succeeded in correctly installing the '7' kernel.
Kristen... I got the same behavior. it seemed to be because I had *two* kernel versions installed, 2.6.27-7 and 2.6.27-11.
the 2.6.27-11 version had been installed (badly) before I fixed the mkinitramfs program, so the symbolic link to it from /initrd.img was broken - this seems to prevent other kernels installing properly. I fixed it by running 'sudo dpkg-reconfigure linux-image- 2.6.27- 11-generic' (note the '11'), which built the correct files, and fixed the link. after that, apt-get dist-upgrade succeeded in correctly installing the '7' kernel.