I found the error. It appeared to be Firestarter that was blocking the
connection to archive.ubuntu.com when "Block traffic from reserved
addresses on public interfaces" was set (which seems like a bug to me -
it doesn't happen in Feisty though). I tried several times so set and
unset that setting and it was clearly related to being able to connect
to the ubuntu server or not.

When I had found that out and unmarked that setting in Firestarter,
update-manager was able to download the ReleaseAnnouncements file and
the upgrade could start.

-- 
update-manager becomes unresponsive because it cannot download 
ReleaseAnnouncement (needs sensible timeout)
https://bugs.launchpad.net/bugs/109397
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