Hello, I’m Nathan, and I’ll be assisting you today. My livelihood depends on your positive feedback, so your satisfaction is my highest priority.
Sorry to hear you’re having trouble, Richard.
If you don't update the kindle, you will still be able to keep using it as you have been for existing books, but the kindle won't be able to update further, load new books/purchases, etc.
You can get a new kindle fire (about $50: http://amzn.to/1TMQ76H )
and your books, old and new, would work on it and would still work (for the older ones) on the current kindle as well.
Updating to a new model does not require transferring anything, as everything, you purchase is available in your amazon account and will work on any device associated with that account.
Would you like some help with updating the old kindle?