For some reason people have been getting random "Update Notifications" when there is no update. Unfortunately, the only "quick fix" is a factory reset.
You can try uninstalling and reinstalling your apps one at a time, but the only way this has been completely fixed in the past was a reset.
Be sure you connect your phone to a PC and copy off any pictures and videos that may be stored on the Internal Storage of the phone before the reset.
Go into the People app and back up you contacts from the settings of the People app. (If all you contacts are in Gmail then no problem they will reload when you re-log in.) Check the market but I don't think there are any SMS backup apps for non-root users, but I have not looked in a while so give a quick search just in case.
If you can, create an appbrain.com account and load the appbrain app to sync you apps. Then you will have a good list of what you had installed. You may also want to make a note of how your screens were set up to make you life easier getting things back the way you like them.
All said and done it should be under 2 hrs to backup what you can, reset, re-download and reconfigure.
Sorry. Let us know if you run into any problems.