Hi there, welcome to phpBB.com!
With regards to the e-mail issue, is there anything in the error logs, either phpBB's or the server's?
Upgrading is simple, and there is a comprehensive guide
for it available. Please do keep in mind though that you would lose any existing modifications and custom styles made to your forum when upgrading. All of the board content would savely be transferred over but customisations have to be re-done.