Have you tried re-calibrating? There's a menu (in settings?) to do that IIRC. I haven't used mine for a long time.
Does everything else work as expected? If so, it sounds like it could be a faulty touchscreen rather than a problematic firmware.
You won't do any harm updating the firmware to see, as long as you follow the instructions to the letter. Be aware that updating can brick your system if not done correctly.