You seem to have two open form tags and one close form tag - so the behaviour may vary depending on the browser. And I suspect that most of the "issues" you have will be in update.php rather than in your code above.

Post up you code from update.php and I (or someone) will have a look. I can also give you a link to a page that uploads and stores an image - here - but in that example I keep the image in the database too. Much cleaner