I recently did the automatic upgrade from 2.9.2 to 3.0.4 and I've noticed that automatic plugin update has stopped working for me. Here is what I've observed/done:
Multiple WordPress installs at 2.9.1 and 2.9.2 were working fine and plugin updates also worked fine.
Updated 2 installs to WordPress 3.0.4 (Automatic upgrade), no errors. Trying to use the automatic update for a plugin stalls at "Downloading update from http://xxxxxx" and the page never updates to notify the successful download and unzipping of the plugin.
However, when I go back to the Plugins page, the plugin shows up as deactivated but is updated to the latest version. I then have to manually hit re-activate and the updated plugin works fine. So it seems that the plug-in download and unpacking is taking place correctly in the background.
I tried de-activating all plugins but it didn't fix this issue.
Another install that is still on 2.9.2 works correctly and is able to update plugins automatically, leading me to believe that this isn't host related or a server side issue. Nor should it be theme related since I've had this issue on multiple sites with multiple themes.
I've also tried deleting the "upgrade" folder and it was re-created with 755 permission.
I'd appreciate it if someone could help me troubleshoot this. The current situation doesn't make me very confident about the whole plugin upgrade situation.