Originally Posted by HarryT
Warning - the update backs up all your content to your PC, does the update, then restores the content. In the case of a "full" 32GB iPod Touch like mine, the process takes something like 4h to complete (but there's no interaction, so you can just set it going and leave it). Don't start it if you know you'll need it in the next hour or so.
Or you can do what I did. I started the update process and left it running when I went to bed, woke up and it was all done.