Cannot update IPAD on 3.2 to latest ipad software

I have an original Ipad on the software that came with the device (3.2) from Apple. I have not gotten around to updating the ipad until now but when I accept the update to to latest ipad release software option I get a message stating the ipad is not entitled to the new ipad software. So what are Apple charging now to update to a new IOS level to fix things like the Wifi issue on the ipad 1. I still have full Applecare on the ipad and yet Apple will not allow me to update to the latest supported release of the iPad software. Has anyone had a similar problem with the original ipad? Perhaps I have to purchase a new ipad 2 or the latest IOS is not compatible with the iPad 1?