WordPress version 2.7 has been released and can be upgraded easily using UNIX / Linux shell prompt. A few assumptions:

1. WordPress database name: wptheosblog
2. WordPress directory name: /var/www/html/theos.in
3. WordPress domain name: theos.in
4. Operating system: Linux

WARNING! If you are not comfortable with UNIX shell prompt (IF YOU ARE new to a UNIX/Linux os), please follow traditional way of upgrading wordpress and DO NOT use the three Steps described here.

Step # 1: Backup old files and database

If you run into problems Upgrading WordPress with the three Steps described here, you need to revert to your old version. Login to your hosting account using ssh client. Backup your mysql database, enter:
$ mkdir ~/theos.backup
$ mysqldump -u vivek -p 'passWord' -h localhost wptheosblog > ~/theos.backup/wptheosblog.sql
Now backup all existing wordpress files, enter:
$ mkdir ~/theos.backup/old
$ cd /var/www/html/theos.in/
$ cp -avr * ~/theos.backup/old

Next, login to your wordpress and disable all plugins.

Step # 2: Download wordpress 2.7 in /tmp

Type the following command (use wget command to grab latest version):
$ cd /tmp
$ wget http://wordpress.org/latest.zip -O latest.zip
Sample output:

--03:29:37--  http://wordpress.org/latest.zip
Resolving wordpress.org... 72.233.56.139, 72.233.56.138
Connecting to wordpress.org|72.233.56.139|:80... connected.
HTTP request sent, awaiting response... 200 OK
Length: unspecified [application/zip]
Saving to: `latest.zip'

    [         <=>                            ] 1,849,558    987K/s   in 1.8s

03:29:39 (987 KB/s) - `latest.zip' saved [1849558]

Unzip file, enter:
$ unzip latest.zip

Step # 3: Upgrade wordpress

Overwrite all files, enter:
$ cd /var/www/html/theos.in
$ rm -rf wp-admin wp-includes
$ cp -avr /tmp/wordpress/* .
Fire a browser and type
http://yourblog.com/wp-admin/upgrade.php
OR
http://theos.in/wp-admin/upgrade.php
Login to wordpress admin panel and enable all plugins.