This has happened randomly with me lately, but I can never figure out a sure fire fix when it has happened, so I'm shooting from the hip here.
1, Try going to downloads in the market, and long pressing on the app the force closes when you go into the app, and click cancel.
2, Update another app while the other app is trying to download.
3, Uninstall it, then reinstall.
Those have worked with me in the past, as this has happened to me several times. 1 may not work, or all of them might not work, it is just things that seemed to helped.
1 quick question, are you on a built from source Froyo ROM?