I´ve got the same problem, tried several times to update my ATV3 to 5.1.1 but the installation process stops always at 95% of the 1st (out of 2) step displaying the message "update was not successful, try to restart ATV and then update again".
I did so 5-6 times including latest time after disconnecting my ethernet cable and using wifi connection instead (as "pinette" suggested) but with no success.
I´m a bit surprised of this malfunctioning behavior of an Apple application update process as these usually are smooth, trustful and successful.
Can anyone please help me in giving a hint how to solve this issue? I´ve updated both ATV 2nd gen and ATV 3rd gen several times earlier with no problem whatsoever. My computer is a Mac Pro running Mac OS X Lion 10.7.5 (can´t run Mountain Lion OS 10.8 on this MacPro) and latest iTunes 11 (which runs without problem on the constellation MacPro/MacOS X 10.7.5). Do I maybe need a Mac computer running Mountain Lion on my home network for being able to update Apple TV 3rd gen to it´s latest software 5.1.1?
If there is no forum member/guest having an answer to this question maybe some representative of Apple support can help me? Is there a working solution or stands this update problem for an application bug?
Best regards,
Stefan