Just when I said I'll root the phone, the next day 2.2 came out.... lol.... I dint have much problem updating. Mine was stuck at the "unlocking sim and setting up your phone", after unplugging from the computer, it continued with out any other problem. My guess is that tasker was preventing the screen from locking when charging that prevented the phone from continuing.
Very happy with 2.2, except for the live wallpaper.... eats too much cpu.... and still haven't figure out how to use the voice command except for web searches.