I just installed the 3.2.10-3.fc16.x86_64 kernel within the past half hour. It's working fine on my machine. I use the kmod-nvidia from rpmfusion, and apparently non of the rpmfusion-nonfree-updates mirror sites (at least the ones I hit) were reporting an available update to the kmod-nvidia module. I checked on the base repo and saw that the updated kmod-nvidia file(s) for the 3.2.10-3.fc16.x86_64 were there, so I temporarily enabled the baseurl= and disabled the mirrorlist= lines for that repo and was able to update to the new kernel along with the attendant kmod-nivida files.
If you're using akmod-nividia, that should have created a new kmod-nvidia file at boot up, so I don't really know why your updated kernel isn't booting. You could try reinstalling the new kernel and see if it goes any better this time:
yum reinstall kernel-3.2.10-3.fc16.x86_64