After waiting for months and I have noticed that the system update page finally points to a real update a few days ago (early Mac 2011).
I followed the instructions and backup my data with the Dell Backup and Restore App available on the Android Market.
After confirmation on two pages with the details of the update including one about "Dell Stage", the update process proceeded to ask for WiFi connection. Then it will proceed to the actual download of the 155MB update package file "Streak_340_14844_31.pkg". The "3" in 340 means Froyo build, 14844 is the build number and 31 means the "AT&T" region.
After about an hour and the download completed, a click on the downloaded file will start the update.
Then the device rebooted and it seems to be installing, so far so good ...
Reboot and continue ... OK, let's call this "Start emergency recovery copy" screen
then this "Android system recovery utility" screen
then finally this "updating" screen.
Here the nightmare has begun, it seems there is nothing to be updated, the device rebooted again and it started from the "Start emergency recovery copy" screen, then proceeded to wait a bit at the "Android system recovery utility" screen and finally went to the "updating" screen. The device has stuck at this cycles. Shutting down the device by pulling the battery and switching on again did not help at all.
I was so frustrated as this should not happen to an official OTA update to a stock ROM. I have checked the microSD card and I did not found any update package in it. I am not sure what did the installation do and what is the current state of the device. Since I have no clue what to do, I switch off the device and asked for help in various Dell Streak forums.
After one full day without a working Dell Streak, I finally got a good answer from the XDA forum, someone which had a similar situation. I proceed to download the "Streak_340_14844_31.pkg" file again from Dell by referring to this XDA Developers Dell Streak wiki. I double-checked the MD5 sum of the downloaded file, renamed to "update.pkg" and copied to the root of the microSD.
After starting the device again, the "Android system recovery utility" has changed to show that there is an update file and I have to press the "camera"button to start the update.
I was so happy to see that there was something to be updated in the "updating" screen.
And finally Dell Streak with Froyo 2.2 and the Dell Stage UI.
I am sure if updating causing a device to be unusable happens occasionally, it will definitely scare most people away from Android. Up until now I am still not sure why was it happen. If the update file I downloaded over the air is not complete or corrupted, the update should not start at all. I hope this post will help others with the same issue.
Next thing to be solved is the restriction by AT&T for side-loading third-party applications.