I just went to another site where I still have Backwpup v2.1.17 installed, and the zip backup ran fine. It's on the same Godaddy hosting service as my other sites.
So it seems that maybe 3.x is not defaulting to the PCLZip method perhaps? And the php zip method is the issue. If so, can you please provide an option to use PCLZip instead of the php zip? Maybe that will solve the zip timeout issue. I can't get the Zip option to work in v3.x after many attempts on different sites. It just stops at around 75% or so and never finishes.
And the other issue is the large (12.5 MB) "sdk" subfolder (with lots of files) in the Backwpup plugin folder. Hopefully that folder isn't necessary. This sub-folder is not in the v2.x version.
Also, Tar format works in v3.x, but you should add the text "(Not Compressed)" next to the Tar option since it does not compress. Not sure why anyone would want to use an uncompressed option anyway. The other 2 Tar options do compress, but if you're not familiar with Tar, one might assume that all 3 Tar options do compression.
And the other main issue in v3.x is the Backups list. It doesn't seem to be getting the list from the current backup directory. And therefore, it gets an error if it tries to delete something that is not in the directory. (as when someone deletes a backup using an FTP client).