Q: No backlight from pressing menu for 2 secs..

You are not alone. I wan the 1.1 updater on my 5G and am experiencing the same problem. Have reset it twice to no avail.

Was this one of the options that the update was "supposed"
to update?

This is a consequence of the 1.1 updater. It would seem to be deliberate since the online manuals have been updated to reflect it.

I'm having the same problem. Reading other threads here I discovered this is a new feature. Holding the Menu button is no longer used to toggle the backlight on/off. Apple has updated the online manuals to reflect the change so it is not a bug in the 1.1 software.

Let Apple know if you don't like this change by leaving feedback at

http://www.apple.com/feedback/ipod.html