It is best to use the newest version of the theme. So when there is a update, please update it. You can see the latest version in your account on pagayo.com.
You can see the version you are using in your Magento connect manager in your own Magento.
When you have not made any customization to the pt004 theme you can simple uninstall the pagayo_pt004_theme and install the latest version of that .tgz file. It is best not to update the pagayo_pt004_media file, this will most likely delete/change your logo and overwrite other images.
When you have done customizations you need to check if you have done them like I have described here. If you done them like this, you can also uninstall and than install the theme.
If you have made customizations in the pt004 theme files you need to backup these files first before you update. I would strongly recommend you first make the changes as described here.