You are not supposed to use while it is downloading and applying the update. It's very likely to have caused the issue. I don't think you can just unplug and start over, though you may try.
I would suggest grabbing a micro USB cable and restoring in iTunes, which will also download the latest update
If you are running 5.1 software and using an ethernet cable connection to your LAN, an easy fix to try is just disconnect the ethernet cable and let the Apple TV connect wireless to your router. There is a bug in 5.1 software which affects certain routers and prevents the update from being processed properly. The bug is fixed in 5.1.1, so you can reconnect your ethernet cablle after the update.