No, sophiek, version 1.8 is the desktop application version and 1.8.1 is the firmware version.
The I'm Reading problem I've been seeing has a two part solution--not sure if it the same for you. When you do the update, you have books that are loaded in the old way in the database. Doing a factory reset will clear out your Kobo purchased/downloaded over sync books from the Db. You can then reload them. They will then be in the reader as kepub files, rather than living in the Db itself.
Books you want to load through ADE or Calibre should be loaded that way again after the factory reset. ADE will need to reauthorize your device. The preloaded books will continue to be in the old kobo format. That appears to be a bit of a problem in Calibre, but Tim Legge is coding a Calibre driver solution for the next Calibre update (0.7.34).
Last edited by taming; 12-15-2010 at 07:39 AM.
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