I have AVG (free edition) and have had the same problem -- says "internet connection failed".....I uninstalled the program and tried to update again....the same thing...then I rebooted and it UPDATED! Then again today it didn't update in the morning but DID update in the afternoon....I don't know what's going on....like someone else on this thread said, perhaps it is just an overloaded server at the AVG website....at any rate, know that you are not alone...
I successfully updated on Friday per post #11. When I read your post just now, I tried the normal method again and it worked. Had to have been an AVG problem.