Using the automatic update feature in D7 doesn't work from 3.0 to 3.1. Instead of updating normally, it appears that a new Omega subfolder is added instead of merging with the current one. For example, the folder structure is modified as follows:
Normal Folder Structure: /sites/all/themes/omega/omega/omega.info
After 1st update attempt: /sites/all/themes/omega/omega/omega/omega.info
After 2nd update attempt: /sites/all/themes/omega/omega/omega/omega/omega.info
I'm unsure if this might be related to http://drupal.org/node/1458518, or if this issue is related even to this module specifically or something larger in module update process.