I updated mine just fine. I first installed the newest v3.43 USB Link software and then just went through and updated the firmware. Did two v3.1s, one in blinky and one in mod and both turned out perfectly.
The mod software is noticeably smoother! I felt like I had supreme control over my car's speed in tight corners. However, I did notice my ESC running about 10 degrees hotter than normal. With the previous firmware, it woudl come off the track at around 135-140, but yesterday I saw 149f a couple of times. Is this to be expected?