The first problem with updating to WordPress version 2.8 was with the automatic update facility, the new version comes with it’s own automatic updater built in. This means the WordPress Automatic Update plugin is no longer required and should be disabled. The actual error message will vary according to the Theme that is in use on your site but will start with:
Fatal error: Cannot redeclare pclziputilpathreduction()
After disabling the WordPress Automatic Update plugin and clicking on the Automatic Update link on the dashboard again the update worked correctly. So that is easily dealt with and not a major problem.
The second problem was more serious, the automatic updates had overwritten the contents of the default theme with the original Kubrick design. If like me you have updated the default or the classic themes but never bothered to create a new theme then WordPress will replace your changed files with the originals.