Gotabemobile reports that the forums at B&N has multiple threads with users who updated to 1.2 and have since seen their tablet reset for unknown reasons. The bad part is that when the tablets reset, they are not able to reconnect to the B&N network and register themselves again. A Nook Color that isn’t registered is essentially worthless. The users fighting the issue are greeted with the notification you see in the photo above.
The bad part is that even users who had no trouble with the installation of the new 1.2 firmware to start with have now found their tablet reset and unusable. At this point, there seems to be some indication that the problem might be related to those that did the update manually with the update being applied again by B&N automatically, but that hasn’t been confirmed. There is also an issue with WiFi connectivity after the update was applied with users reportedly unable to connect to WiFi intermittently.