Mine does this all the time (2.3.6 Market/Vodafone), I have to clear the cache in settings>applications>manage applications>market EVERY time I want to download something....tedious I know
Once I do that, go back and press Update they come down instantly.
I had the same problem if i tried to update via the notifications.
when i went directly to the market web site and clicked up-date there, the old versions of the apps were removed and the new one down loaded with no problems
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