I guess one should not run the software update when running off of a pendrive. Each time I have, not only does the update crash, but the usb drive becomes unbootable? Should the ablitiy to run a software update be disabled for pendrive instances?
You shouldn't have a problem updating your install as normal. So no the ability shouldn't be disabled.
If you are having problems with this I suggest reporting a bug. Whilst running Ubuntu press Alt+F2 and type