AndroidandMe noted that as far as they can tell, the latest version is mostly bug fixes and includes increased internal storage space, speed increase for the stock internet browser, improved Flash support, and improvements to the phone's 3G reception. The file is also fairly small, with Phandroid reporting the update to be "about 1.86MB in size and is designed to be flashed over FRF50 (trying to flash it over anything else simply won’t work)."
AndroidCentral wrote that to get this update to work on you phone "you must also have the stock Nexus One ROM installed. From there, download the update, rename it to update.zip and slap it on the SD card. Boot into recovery, and away you go."
Those of you with rooted Nexus Ones can head on over to XDA to get a version for rooted phones.
Some issues with Google Voice and Skype are being reported, but AndroidandMe put together walkthroughs for how to install and how to get Swype and Google Voice working again if they don't work after the update.
Image from AndroidandMe