Recently Update 1 for vSphere 4.0 came available. It seems there is a serious issue when upgrading from 4.0 to 4.0 Update 1 using Update Manager and where ESX-hosts make use of 3rd party Monitoring agents (in COS).

Upgrading to U1 using Update Manager with 3rd party management agents active may result in a failure by timing out and/or PSoD (Purple Screen of Death).  To recover from such a situation a fresh install of your host is necessary.

To avoid a fresh install disable the 3rd party management agents before upgrading and enable them afterwards.

Note that ESXi is not affected.

UPDATE (VMware Knowledge base blog):

A quick note: The problem with U1 is now known to be limited to HP Proliant systems and HP Insight Management agents are running. See the updated KB article.

Read more in VMware’s knowledgebase article KB 1016070