I also wonder why 3.2.4 is bundled with Seam. I upgraded to 3.2.6.GA with no problems, just replace Hibernate3.jar.
I also upgraded to 3.3.1.GA, the latest stable relase, but this was a bit more complicated because quite a few dependant jars had to be updated. Nevertheless, I have been running this configuration with Seam 2.1.1.GA for several monthes with no problem.
I updated Hibernate jars from Seam 2.0.0.GA, Seam 2.1.1.GA and Seam 2.1.2-SNAPSHOT to Hibernate 3.3.1.GA and its compatible jars (search, entityManager, annotations, ...: see Hibernate website) : no problem found.
Maybe other Seam users can report to which Hibernate version they updated, so we can open a JIRA issue with a task
Update to Hibernate version X.X.