To manually install Android 2.2.2 on the Nexus One, perform the following steps:

[hecatae]

Download the update file from Google’s server: http://android.clients.google.com/packages/ota/passion/2854b06b22b9.signed-passion-FRG83G-from-FRG83D.2854b06b.zip
Copy the file to the root directory (aka not inside any folder) of your microSD card and name it update.zip Tip: Be careful not to name it update.zip.zip
Power off your phone.
Hold down the VOLUME DOWN button and power it back on.
Wait for your phone to load the skating Androids screen. Scroll down to recovery and press the POWER button.
When you see the “/!\” symbol, press the POWER button and the VOLUME UP button at the same time. You should be presented with a menu and one of the options should be “apply sdcard:update.zip”.
Use the trackball to navigate to “apply sdcard:update.zip” and select it.
When you see “Install from sdcard complete”, select “reboot system now”.
The whole process takes about five minutes

[Hands0n]

Thanks for the update instructions and the link. I had been waiting for the Nexus One update to arrive OTA but it still hasn't got to mine. I'll probably just do the manual method, its just as well.

I also had to manually update the Nexus S for the same reason - mostly impatience, but also because of the SMS bug. The last thing I want is for my messages to end up at the wrong recipient. That is just too tiresome for words.

So to anyone reading the above - go for it. The notion of OTA is great, but so is having the capability to do it yourself.