I haven't looked into squeeze at all so can't answer that with any level of certainty but Debian is Debian.. if they make it apt-get dist-upgradeable then yes.

Yes you can apt-get update/upgrade in easy Debian but again you're now changing software and library versions and as such some stuff may and may not work after doing that.

As far as why some software I can't give a definitive answer. Just because it was compiled for arm doesn't necessarily mean it'll work. Thunderbird, for example, was installable but simply crashed on my N810 every time I tried to run it. Why? I dunno.. never looked into it that far.

Plus some apps are, say. 3D but dont support OpenGL/ES so even tho its probably installable the 3D on the N900 can't run it. There's any number of reasons why software won't work - I don't know and certainly couldn't list all of them here.

ETA: Sid joke got a chuckle outta me