Kernel Panic when updating Wholehog 3?

When trying to do a software update (full install) from 3.1.9 to 3.2.0 the system keeps locking up.

It freezes whenever I choose "full install" in the boot menu, regardless if I have a CD in the drive or not.
Sometimes it spins up the CD-drive before freezing, sometimes nothing happens, it justs lock up and the three keyboard lights starts flashing.

Unplugging external keyboard/mouse/DP etc made no difference.

Any ideas?
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