I'll give you my story. I had the same update problem as kblakely. Updated, and stuck at the blinking red eye for at least an hour when I came upon this thread. So I went ahead and called VW support. Support tech was very nice although hadn't yet heard of this problem. He excused himself for a few moments, came back and told me to go ahead and pull the battery, which I did. I was instructed to pop the battery back in and try to start the phone. Stuck again at the blinking red eye.
He then said oh well, phone must be bricked, I will send you a new one. Hmmm, ok by me i guess. So I set that up, hung up the phone, and thought what the hell, new phone coming, I might as well try resetting the phone myself.
I had to look up on the interwebs how to go about doing that, but quickly found it and after pulling my sd card, went ahead and formatted and reset and reactivated the phone. Well, what do you know, it booted right up and after checking the firmware version, it has the 2.1 update!
As I type this i just checked and 31 applications have been restored. So except for a few cosmetic details (resetting my 3 screens) my phone seems to be mostly back to normal.
Soooo, here is my slight dilemma. I have a new phone coming in the mail (overnighted tomorrow), and i am supposed to send this phone back. So do I keep the new phone? or call VW back and cancel the order? I'm thinking I'm gonna send this phone back and keep the new one (this one has that pesky headphone jack issue that drives me nuts).
Whatcha think?