I have updated the software version on my phone to Android 2.3.3 - I was impatient and followed the guide over here which allowed me to get the update faster.
I have to say the new animation when the screen turns off is pretty nifty - its like those old CRT TV's when they would turn off.
I also now have the ability to use the latest apps such as iplayer and the flash plugin for the web browser.
So far so good.
Just a warning for those who wish to follow my path - the backup app with the phone when using android 2.1 does not exist when using 2.3, so make sure you use a separate one that will back up your settings.