You cannot upgrade the S60 version on any phone, the S60 OS is hardware dependant and is not upgradable.
You may be facing a virus problem or maybe due to some software installed, the phone is not able to make itself ready for the Mem card removal. I would suggest you scan the card for viruses on the computer, and try the Hot Swapping with any of your friends card.
You should also consider updating your phones software by visiting
www.nokia.com/softwareupdater
If nothing works, take a backup off all your imp Data, not the softwares, just multimedia and contacs and sms. Format the Mem card using, and then format your phone using the code *#7370#