3.1.1 Update Fix
I ran into the same problem of superuser not being able to update the su. When I rooted my phone it updated just fine, but when I was rooting a coworkers the su failed to update. I noticed that they did not have usb debugging enabled and did not allow apps from unknown sources. Enabled those two options and it updated just fine after that.
I have now rooted 5 different commandos for people at work and so far so good!