I think the latest version is 2.10. You may be able to upgrade via the CDR(w) drive, depending on your equipment and current version. If not, you'll need to replace a chip. Having the latest version will allow you to install a larger hard drive...you may actually be able to use a larger drive with your current version, but the latest version has a couple nice extra features and is worth getting IMO.
I'd agree to check the info out on the Tascam forum, except it's been offline for a few days. You may want to give their customer service department a phone call instead.
The latest version is 2.01. It gives the 788 the ability to recognize 64 gig, 4 partitions of 16 gig each. It also allows import/export of .wav files, and a bunch of other little extras. You will definately want to check out the Tascam 788 forum when it comes back up. Check out the FAQ section to find detailed explanations on upgrading.