On apt-get dist-upgrade, it will not update your server to Ubuntu 10.10.
Instead it is used to install new versions of packages, for example your
kernel. Excerpt from man apt-get:

dist-upgrade in addition to performing the function of upgrade, also
intelligently handles changing dependencies with new versions of
packages.

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https://bugs.launchpad.net/bugs/683078

Title:
  available kernel updates not reported after login to shell

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