It would appear that this latest airport firmware update is far from being adequately tested before release. I updated the airport firmware upgrade on my MacPro via wifi. Updated fine but when the airport restarted I could not see it on the airport utility (via wifi!). Had to use Cat5E cable, then the airport appeared on the left column. As soon as I clicked manual set-up, like others on this thread, I got the -5 error message. Tried it several times on different macs around the home, made no difference. Finally, I decided to perform the hard reset, then started from the begining with 'create wireless network', named it as before, setting the WPA2 security password etc.., and hit update. Everything back to normal, and both my i-touch and MacPro can now see the base station in wifi mode.
The least we could have was a warning from Apple that this update may cause wifi problems and a suggested documented solution.