What is your current OS? Windows Phone 8? Or 8.1?
If it's 8, it might be because of the Dev Preview that you cannot update since 8.1 is (in theory) available to the public. I suggest uninstalling the Developer Preview, restart your phone and then try the phone update again.
If it's 8.1 you got and want to install 8.1 Update 1 (I like to call it 8.1.1) then I am not sure, only verify that Bitlocker isn't turned ON in your phone since there's a known bug that prevents people with Developer Preview to update if they have that ON (If you do have it on I think the solution was the use the Nokia Recovery Tool)