Shmuel,
I’m assuming that you are using the Web UI upgrade and haven’t gotten the jffs2 and kernel images from somewhere.
How full is the root filesystem on the device? I have seen instances on upgrades in the past where if the API process or lighttpd process cannot allocate enough memory for the download of the upgrade file it will appear to silently fail. The failure will show up in the logs, but the reboot clears out all the logs so we lose any record of the failure.
Jeff