I am using kernel version 2.6.35 in Ubuntu 10.10. Can I update my kernel to the latest version, which is v3.2-rc3-oneiric as seen on http://kernel.ubuntu.com/~kernel-ppa/mainline/ ?
As far as i can see it's not available a deb package of the linux kernel image v3.2-rc3 at the moment, but when it will be available you should be able to upgrade provided that you first install:
After that, just download and install the three files you need from the link you posted (the xxx_all.deb and both xxx_i386.deb or xxx._amd64.deb). Finally don't forget to run sudo update-grub2 from a terminal. Note that it's not guaranteed to work properly, since the package it's not intended for maverick (and of course this is a release candidate!)