I’ve successfully updated my Nexus One to the latest android version, hello Froyo! It may seem a bit daunting to those of you who have never done it before but if you follow the instructions carefully it’s actually quite easy. The below instructions was copied from several websites so I take no credit for it.
Updating your Nexus One to Android 2.2 (Froyo)
1. Download the update file to your PC from here. (Google has removed it – You can get it from here instead)
2. Do not extract the file, simply rename it to update.zip
3. Now you need to place the file into your microSD, you can either do this by connecting your Nexus One to your computer with the supplied USB cable or you can use a card reader and copy it over. Place the zip file on the root folder of your microSD.
4. Power off your Nexus One
5. Hold the trackball, volume down, and power button AT THE SAME TIME until you get a white screen
6. Navigate to the recovery option using the volume down key then press the POWER button to select it
7. You will then see a triangle picture with an android and exclamation point, next press and hold the POWER button and press the volume up key
8. Use the trackball to navigate to “apply sdcard:update.zip” and push down the trackball to select it
9. It is now updating to android 2.2, it takes a while and will reboot itself. If it doesn’t (after 30mins!) then manually reboot your Nexus One
10. Once rebooted give it time to “refresh” with all the new changes 
Oh don’t forget to install Adobe Flash player (suck on that Apple!), go to the market place or browse to www.adobe.com/go/getfp10android to install it.
Will upload images tomorrow! Photos uploaded
Photos uploaded
any real differences?
I mean the new version.
Nope didn’t notice much difference performance wise, minor aesthetic changes here and there.
Latest version of Froyo 2.2 (FRF85) is now official released by Google
http://googlenexusoneboard.blogspot.com/2010/06/new-android-22-software-update-for.html
It’s now updated to FRF91, just received an over-the-air message a moment ago and the update process was pretty easy and smooth.