Yeah, as was mentioned by Hans, you can only (presently) upgrade via the serial port. I believe that we will get Ethernet/USB upgrades at some point.
The problem with USB/Ethernet upgrades is that if they go wrong and you end up with no kernel (like I did), you'd probably have to use the serial port to recover anyway as without a kernel, you won't have Ethernet or USB support.

Cheers,
Andy

26GB MKII Blue #090000727
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26GB MKII Blue #090000727