Mine appears to be a 2-step process--
started off with:
s/w version
pda i760.07.bc04.17233
phone i760.07.bc04

"Upgrade Stopped" message requesting that I reset the phone and re-start the upgrade process (I forget at what percentage mark this occurred).

Restarted the phone. I restarted the Upgrade tool. Detection did not go smoothly, so I canceled the upgrade.

I saw the Win Mobile 6.1 splash screen, I calibrated the touchscreen, and I checked versioning: the pda version had changed but phone version did not:
pda: i760.07 v.bd14:19202
phone i760.07.bc04

I then allowed ActiveSync to sync w. the device and then re-started the upgrade. Detection went well and upgrade proceeded properly to 100%.

"Upgrade completed"
pda: i760.07 v.bd14:19202
phone: i760.07 v.bd14