My Zune80 started acting strange after I installed the firmware update as well. First it would get stuck on a track and not progress to the next one. Rebooting it didn't seem to clear this up.
Not the dPad is not working at all. Of course that means not more rebooting. It currently stuck waiting a few days for the battery to drain to see if that clears it up.
__________________ Phone: Nexus one Backup Phone: AT&T Samsung Jack; Future Phone: I'm Watching WP7; Media Player: Platinum Zune HD 32GB; Home Server: HP MediaSmart Server LX195 Console: XBox 360, PS3, Wii