Thanks for the tip Wolfgang!  This solves the problem.
However, is this a solution, or a workaround?  I mean, why must the xupdate have be modified because of the document's namespace.  If I were aplying an xsl to my document, I wouldn't have to modify it, because of the document's namespace.  So why does the xupdate have to be?

From: Wolfgang Meier <wolfgang@ex...>
 > When I store a document with a default namespace (i.e. <ROOT

 > xmlns=""></ROOT>) on the root node, I cannot
 > xupdate it (no errors, just fails).
 For the xupdate to work, specify a namespace prefix in the xupdate
 element and use this prefix within the select:
 <xu:update xmlns:t="" select="/t:ROOT">
 Hello World!
 I tested this with the latest snapshot version.