I fixed my error with it hanging by going to System | Administration |
Software Sources and switching the server to the US server instead of
the 'Main Server'.  After it reloaded the sources I ran the Update
Manager and clicked the Upgrade button as recommended.  It didn't hang
then.

-- 
Upgrade to 7.10 hangs at "Modifying the software channels/Checking package 
manager"
https://bugs.launchpad.net/bugs/152296
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