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Reporting my Kobo Touch was purchased christmas 2011 at officeworks in Sydney.
I had the dancing squares update issue till I manually updated to v2.0. Later versions would not install, manual or online.
Just did manual instal of 2.1.4 r43720 and all is now good.
Install from v2.0 did not work, had to do factory reset first.
New firmware is fast and I'm now happy.
With it playing nice with Kobo Desktop I'm looking at purchasing books, hint to Kobo, previews need to be longer than the acknowlegments/copyright page.
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