Microsoft have recently released an update to their portable music player, the Zune to firmware version 1.2.

from the update:
This required update will help enhance stability and performance.

For devices being upgraded from Zune firmware version 1.0, this update includes the enhancements provided in Zune firmware version 1.1.
Not much is said about what all the update entails, apart from enhancing stability and performance.

Engadget is reporting some troubles getting the firmware to install, which could just be related to their setup:

And if you have a Zune and don't know how to update the firmware take a look at the following site:

How to update the Zune Player firmware:

Firmware is embedded software that controls the operation of hardware devices. At first, the firmware is installed at the factory. However, you can upgrade the firmware for a piece of hardware as enhancements become available.

The current version of the Zune firmware is version 1.1. This version adds the following enhancement: Enables Zune-to-Zune wireless sharing and enhances performance. By default, the wireless feature is turned on. To turn the wireless feature off, select Settings, select Wireless, and then turn off the wireless feature.
To install the latest Zune firmware, follow these steps:

1. Install the version of the Zune software that was included with your Zune device.

2. Connect your Zune device to a computer, and then put your Zune device on a stable surface.
Note If the battery in your Zune device is critically low, we recommend that you charge your Zune device before you continue. For more information about how to charge your Zune device, click the following article number to view the article in the Microsoft Knowledge Base:
927348 ( How to charge the battery in your Zune device

3. Open the Zune software. You receive a message to update your Zune device. If you do not receive this message, follow these steps: a. Click Options, point to Sync, point to <device name>, and then click Check for Zune Device Updates.

The Zune software searches the Internet for the latest version of the firmware and compares that version to the local copy of the firmware that was installed by the installation CD. By default, the Zune firmware is installed to the following location:
C:\Program Files\Zune\Firmware
Note We recommend that you maintain an Internet connection to help make sure that you have the latest version of the firmware installed. If the computer does not have an Internet connection, the Zune software automatically installs the local copy of the Zune firmware onto your Zune device.

If a newer version of the Zune firmware is available, you receive the Update time dialog box. If this is the case, click Next.
Important Do not move or disconnect your Zune device until the update is completed.

b. As the update continues, you receive the Update in progress dialog box.
Note The update may take several minutes to be completed. During this time, your Zune device may restart several times. Please be patient.

c. After the update is completed, you receive the Zune update complete dialog box. Depending how your Zune device is configured, click Next to complete the update process and continue to the next step, or click Close to complete the update process.

4. If you already have the latest version of the Zune firmware installed, you receive the Update your Zune dialog box and a notice that the firmware is up to date. Click Close.

If you want, you can manually determine the current version of the firmware that is installed. To do this, follow these steps:

1. On the Home screen on your Zune device, select Settings, and then press the OK button in the center of the Control Pad.

2. Select About, and then press the OK button.

3. Select Zune, and then press the OK button.

The version of the firmware appears together with the build number in parentheses. For example, you may see one of the following versions: Version 1.0 (193)
Version 1.1 (322)
The Zune Homepage: