I've had exactly the same problems with this 'update' as many others seem to have had on these forums.
It would appear that there is a serious problem with this update and, consequently, I suggest that Iomega/Lenovo withdraw the update from their web site and advise customers NOT to install it.
I am utterly APPALLED to see that so many people have been having problems with this so called 'update' on this forum, yet they have left it available for others to download and install, KNOWING FULL WELL that it has destructive tendencies.
Contrary to their suggestions otherwise, I would say that they ARE liable for issuing alleged 'updates' which result in destroying a customers working device. Mr. Lenovo / Iomega please NOTE.
So I think the very least that they should do is offer the previous version of the firmware so that at least those of us that are able to coax the darn thing back to life can 'upgrade' ourselves back to the previous version!

My unit seemed to power up 'normally'; i.e. power LED goes solid white after about five minutes or so of flashing, and no error indications. But it doesn't talk to the network (and is much slower to 'start' than before!).

I eventually coaxed it back to life using the suggested direct network connection to PC, with a DIRECT cable connection (NOT a cross-over cable). It didn't seem to work at first, but after lots of unplugging and re-connecting of the network cable & re-trying the 'Arp -a' command .... I eventually did see a 169.xxx.xxx.xxx address, along with what I knew to be the correct 'MAC' address of the NAS.  I then reconnected via my router, and all seemed OK.
The first time, this all took me the best part of 2 DAYS to get to this point!! (Thanks Mr. Lenovo)  
So I was a little reluctant to switch the thing off again. But I don't like to leave it on all the time, so shut it down overnight. Optimistic that I had 'fixed it'.
The next day, I was back to square one again and have now just spent another 4 HOURS coaxing the thing back into life again.
SO ... as stated above, it would appear that this firmware 'update' has messed up something in the network set up process.
Although it is capable of operating 'normally' with a lot of manual intervention.

Lenovo people ... I don't care about being out of warranty.  You OWE us all a solution.
Unless you're quite happy for the reputation of your company to go down the toilet. Coz it certainly will if this is how you behave with your customers.

Thanks to maquinax for the suggested procedure to coax the device back in to action.

I've just tried it and it worked OK, and was much quicker than what I was doing before!
(Just wasted most of my weekend on this infernal machine!).

Since I'm sure that many of us will not really want to use their 'destructive' flash with imager option (even if they do deign to offer it to us), I have proposed above that the least that they should do is offer us a download for the previous firmware version so that we can at least get back to a stable working platform (assuming there is no reason that we can't do this as a firmware 'upgrade'?).

Hi Maquinax, 

I tried your method, when I reconnect the LAN cable I get the red light (warning symbol)?

Any idea how to fix would be much appreciated?

I'm having the same problem as pretty much everyone else here. None of the fixes I've seen described have helped me. I have the EZ Media & Backup Center. I can see it's there on my network. I can ping it. I can view videos and other media that are on the drive using Windows Media Player and Twonky, but no access using EMC Storage Manager. I've tried various sorts of resets and restarts without luck.

I was under the imporession that I had a three year warranty, since that's what it says on the packing box but Lenovo says it's out of warranty. Can I get a copy of that imager somehow? I know it's data destructive but I do want to regain the use of this drive.

I would like to 'downgrade' my Firmware to the previous version, because the recent 'upgrade' to
version 3.2.8.30031 seems to have screwed up the network port configuration making it difficult to use.
Can I download a previous 'stable' version somewhere and install it onto my drive to restore it to its
previous working condition?

My drive is a Home Media Network Hard Drive, Cloud Edition.
Previous Firmware    3.2.3.15290

is there any way to access the data thru the usb port?

Can you share your router model?