We try not to flame people here
There are a couple of different ways to do kernel upgrades. If your distro (or a third party) supplies a format that your package manager (RPM on Mandrake, dpkg on Debian, etc.) can understand, you can install the new kernel just like any other package and reboot. You may also compile a kernel for yourself from the official sources from www.kernel.org
(many distros add their own patches to the kernel). This is not as hard as it sounds ... there is a guide on how to do it here on LQ, so try to follow that if you want to play with it.
As for your problem, it's an ointeresting one. Maybe you ccould try launching ethereal and seeing if there's a lot of bogus traffic flying around gumming things up. Also some basic info (system stats, network connection type, etc.) would help in troubleshooting.