The same thing happened to me on Windows 7. After this failed update, cordova couldn't be found, somehow it was removed.
I had to wack /users/me/AppData/Roaming/npm-cache/cordova folder and then redo the install with npm install -g cordova. It seems to work fine now. This isn't the first time I've had problems with updating from npm...however I use the git client as a shell and just generally have a pretty messed up dev environment, so I've always been a hesitant to claim there is a bug since afaict I've been the only one with this issue.
