The firmware upgrade via the webGUI has issues from time to time. Right now it seems to be affected by a Lighttpd bug for some people, when they upgrade Lighttpd dies and hence the webGUI isn’t accessible (console option 11 restarts it).
The console upgrade was added a while back to work around difficulties when upgrading from the web interface. I prefer upgrading this way because I can just paste in the URL to the update file, and it downloads and installs automatically.
To use the console upgrade, enable SSH on the Advanced page, and use your SSH client of choice to log in (username root, password is your webGUI admin password). From the console menu, select option 13. You can then select whether to update from a URL or a local file. You can also do this from the actual console of the machine, but most would probably prefer doing it remotely.