I removed the old squeaks with 
#apt-get remove squeak-image squeak-sources squeak-vm
then reinstalled with
# dpkg -i squeak-image_3.4-5170_all.deb squeak-sources_3_all.deb squeak-vm_3.4-1_i386.deb

Now squeak -version run as a normal user returns the correct
version. inisqueak still points only to the older images, though.

$ squeak -version
3.4-1 #3 XShm Tue Mar  4 05:43:28 CET 2003 gcc 2.95.4
Squeak3.4 of 1 March 2003 [latest update: #5170]
Linux xombul.inria.fr 2.4.19 #2 Mon Aug 5 12:44:11 CEST 2002 i686 GNU/Linux
default plugin location: /usr/lib/squeak/3.4-1/*.so
$ 
$ inisqueak
No default image, looking for alternatives...

I found the following images:
     1  Squeak3.2-4917
     2  Squeak3.2-4952
     3  Squeak3.4gamma1-5168
(of which I might recommend Squeak3.4gamma1-5168, unless you know better).
Which one should I install [1-3]?
$ 

-- 
Stan