freebsd-update question

[Dan Busarow]

I'm trying to use freebsd-update to upgrade a system from 7.0-RELEASE- 
p9 to 7.1

running

# freebsd-update upgrade -r 7.1-RELEASE

generates this

   Fetching metadata signature for 7.1-RELEASE from  
update1.FreeBSD.org... done.
   Fetching metadata index... done.
   Fetching 1 metadata patches. done.
   Applying metadata patches... done.
   Fetching 1 metadata files... done.
   Inspecting system... done.
   Fetching files from 7.0-RELEASE for merging... done.
   Preparing to download files... done.
   Fetching 2 files... done.
   /usr/sbin/freebsd-update: cannot open files/.gz: No such file or  
directory
   [snip]
   /usr/sbin/freebsd-update: cannot open files/.gz: No such file or  
directory
   /usr/sbin/freebsd-update: cannot open files/.gz: No such file or  
directory
   /usr/sbin/freebsd-update: cannot open files/.gz: No such file or  
directory
   Attempting to automatically merge changes in files... done.

   The following file will be removed, as it no longer exists in
   FreeBSD 7.1-RELEASE: /boot/device.hints
   Does this look reasonable (y/n)?

A couple hundred of the cannot open lines

This is on a fresh install from a 7.0 boot only CD with installation  
via FTP.

Any ideas what I might be doing wrong?

Thanks,
Dan