My iPhone 4 hung part way through the update process from 4.0.1 to 4.0.2. All seems to be working well though. I shut down my Mac, restarted it, hooked up the iPhone, got the message to reset and scrub all data. I looked at
http://support.apple.com/kb/ht1414 which assured me that there is a recovery path from backup. So it scrubbed it, resurrected it, asked me which backup I wanted (only one choice and that was me), and it is now proceeding to reload all m apps, songs, flicks, and such.
So it isn't as smooth as a simple update but it seems to be recovering from the backup which I count as a success of sorts.
Be sure you sync you update your apps, sync your phone (when it backs up), and perhaps even force Time Machine to do an early sync before you update the iPhone OS.