Go to the Nokia software update site, connect your phone to your PC but don't run PC Suite, make sure it's not running. run the software updater, it should complete ok. Make sure you've taken a backup first as you will lose all data/settings. (not sim contacts though, they are left intact)
Hope this helps.
Hmm.. When you plug your phone into your PC does the phone give you connection optioins?
If so, select 'Mass Storage' , make sure Nokia pc suite isn't running and run the updater independantly of pc suite.
My phone updated ok but I've noticed quite a few posts of other folk having problems. It may be something to do with the code level it's updating from, mine was level 100.xxxxx
Hope you find a solution.