If you get the Red update failed pop-up.
Try a manual virus definitions update, if that fails what error/notification are you getting (usually in the interface) ?
If it is saying that your virus definitions are up to date then try a repair of avast:
XP - Add Remove programs, select 'avast! Anti-Virus,' click the Change/Remove button and select Repair, click next and follow.
Vista, win7 - Control Panel, Programs & Features, uninstall a program, select 'avast! Anti-Virus,' click the Uninstall/Change and select Repair, click next and follow.
You may need to reboot after the repair.
This has in the past resolved this out of sync issue between reported and actual VPS version.