Problem upgrading N1 to Android 2.3
Sounds like a bad download.  I'd delete it if you can and try again, or download and upgrade manually.  For 2.2.1, try following this post at androidandme.  If it was 2.3 you might want to wait, Google has said it wouldn't be released for the N1 till after the holidays (example) so it might have been a mistake.