Thanks for the advice, mamasue... if I'm able to I will do the update. As it is at the moment though, I'm not sure that I can even get my Kobo to respond to anything to be able to do it.
As it seems to be stuck in a loop, when I woke this morning the battery is now drained so I have it on charge hoping that tonight I might be able to get it into upgrade mode. If I can, then I will have to work out how to make an SD card because I opened up my Borders app last night (I'm in Aus too) and it didn't have any kind of prompt about any updates at all... not really sure what is going on there!
On the other hand, I've only had the Kobo for 6 months: I'm tempted to take it back to Borders and see if I can get one of the new Sonys instead.