I've seen that happen before many times - most recently on Saturday. The cause is probably on the AVG server side (server might be too busy) so there's nothing for it but leave it and try again later.
Yes - I've had terrible trouble trying to update several PCs over the weekend and assume that the problem lies with Grisoft's servers and that it will hopefully be fixed anon.
By the way - I should have said that when I had problems updating I downloaded the update file(s) manually and used the "update from folder" option to perform the update. The only gotcha is that you need to take care to make sure that you use the appropriate update file for your AVG's current update level.
No - it's the Virus Base revision specified when you choose Information -> About AVG Free from the AVG menu. Sometimes manually downloaded updates specify a minimum required version that you need to check before updating (or the manual update process may check these automatically now - I'm not sure).