You say you did update it? Did you update it using the OTA prompt or manually?
If you did it manually then try re-applying it. If you did it OTA then do a factory reset.
Turn the phone off. Turn it back on while holding the X button on the physical keyboard. When the phone boots to a screen after the motorola logo then press volume up and camera button at the same time. You should now be in the recovery console and can use the D-pad to select factory reset.
You'll lose your text messages but all your pictures and documents are on the SD card and will be fine. All your apps can be reinstalled through the market (you wont have to pay for them again) and you contacts are backed up to your gmail on google's servers (as long as you didn't disable syncing). And of course all custom settings will be lost. But really it only takes an hour or so to set it back the way you had it.
If you take it to a store this is likely what they will do.
The other option is to manually download the update and apply it manually. If that works you shouldn't lose anything. Directions here:
Manually Update Your Droid To 2.1 (ESE81) | Android Phone Fans
