Before updating your theme you must backup both your database and files:
You can use this plugin - BackWPup - http://wordpress.org/extend/plugins/backwpup/
Also backup your files by downloading your old theme to your desktop (or other local storage). It is also important that you know what files you have tweaked or customized.
Download the latest theme from ThemeForest.net, unzip the downloaded file and you should see display.zip (unzip this file and inside it you should see 2 folders, _MACOSX and display folder). We will be using the (new) Display folder later.
Login to your site and switch your theme from Display to TwentyEleven (or other themes available except Display)
Using FTP software connect to your site. remove the old Display theme inside wp-content/themes and upload the (new) Display folder
If you have made tweaked some files or made some customizations in your old Display theme (usually files like style.css, functions.php or style1.css), kindly add those customizations to your new Display theme
Go back the your WP Admin Dashboard and switch your theme to Display
Hope this helps. :)