I have an RPi 2 B running a custom Raspbian kernel provided by the vendor. Touch screen is a 3.5" LCD. It works fine until I do either apt-get dist-upgrade or apt-get upgrade. I still get the display working, but I lose the touch screen ability. How do I prevent the loss or recover the ability to use the touch features
You will need to contact your vendor and follow their upgrade instructions instead of using apt-get. Likely there is a separate repository for this image. Worst case you need to find out which packages are critical to the touchscreen setup, and manually force those to be held back to the current version in apt.