My Zune 2.5 software detected that an update was available it then launched a Zune Setup window, brown background with the Zune logo and that was it nothing else happened, left it for a good while still nothing. So closed that and went to http://www.zune.net/ the site was down for maintenance or so it told me. Did a refresh 5 minutes later and the site was back, I downloaded the Zune 3.0 installer.
Once I had the Zune 3.0 software installed after a reboot, I plugged in the Zune device, Windows Vista then decided it needed to install the device driver again for the Zune device, it failed twice on the third try the driver was installed.
The Zune software then advised me I had to upgrade the Zune device firmware to 3.0 which it did. However the Zune software never told me the installation had finished, I just had a cancel button. Back and Next buttons were both greyed out. One admission, is that I was playing an album in the background in the Zune software, probably should have not been doing that whilst trying to update the device!
I kept the Zune device connected via the USB cable, the Zune had rebooted and done its thing, the About in Settings on the device confirmed 3.0 version level. Games had appeared on the main menu but no Market Place option, probably because I am not in the US.
So I figured the update had finished I closed the Zune software and re-opened it. I then started a sync, the only items to be added to the device were 38 photos however it is still syncing now taking bloody ages and only at 27%. Its doing some update routine on all my 3800 + music tracks, no idea why it's having to do this? But its slow and my PC seems slower as a result.
First positive thing, I like the new clock in the top right hand corner on the Zune device lol! But will you have to keep resetting to the correct time every time the battery dies, I suspect you will.
Update: Just to let you know it did finally finish updating / syncing.
See the screen shots, click them to make them larger.