Processing triggers for initramfs-tools ...^M
update-initramfs: Generating /boot/initrd.img-3.2.0-31-generic^M
cryptsetup: WARNING: failed to detect canonical device of /dev/sda3^M
^M
gzip: stdout: No space left on device^M
E: mkinitramfs failure cpio 141 gzip 1^M
update-initramfs: failed for /boot/initrd.img-3.2.0-31-generic with 1.^M
dpkg: error processing initramfs-tools (--configure):^M
subprocess installed post-installation script returned error exit status 1^M
From what I can tell it looks like you have a separate boot partition and this seems to be full. I'd remove some older kernels and then continue the upgrade.
You seem to have run out of free space:
Processing triggers for initramfs-tools ...^M img-3.2. 0-31-generic^ M img-3.2. 0-31-generic with 1.^M
update-initramfs: Generating /boot/initrd.
cryptsetup: WARNING: failed to detect canonical device of /dev/sda3^M
^M
gzip: stdout: No space left on device^M
E: mkinitramfs failure cpio 141 gzip 1^M
update-initramfs: failed for /boot/initrd.
dpkg: error processing initramfs-tools (--configure):^M
subprocess installed post-installation script returned error exit status 1^M
From what I can tell it looks like you have a separate boot partition and this seems to be full. I'd remove some older kernels and then continue the upgrade.