You may have updated the package, but did you really boot from it? Run 'uname -v' to check:
$ uname -v
#1 SMP Debian 3.2.46-1
DigitalOcean systems do not boot from the kernel image installed within your VM; they are externally provided.
This reminds me of something I omitted from my original rant. I've actually had to pin the kernel image package that I've got installed on my VM to the version that DigitalOcean provide:
Because an unforseen ABI break in some netfilter module means that if I install the newest package, then reboot, one of the modules used by my iptables setup fails to load. ferm notices this and rolls back my firewall configuration--to the default state which allows all traffic. I noticed this, but I wonder how many other customers with similar setups did not, and hence have not noticed that their iptables rules are incorrect or absent.