I have the same problem.
It seems, that the update mechanism is very shaky. I am running bench 3, ERPNext v7.
Now my system is broken and i dont know how to bring it back to live.
It is not a production system, but looking at production scenarios the update mechanism must be bulletproof… 
UPDATE:
I found a hint from vjFaLk:
sudo apt-get install libffi-dev
This handles the error and interruption of the bench update.
After installing this missing package the update went successfully and the ERPNext started also without any problems.
Problem solved.