This looks like a comprehensive list of upgrading choices. It seems the live CD 
can do it too since Natty:
http://askubuntu.com/questions/12909/how-do-i-upgrade-to-the-development-release-aka-ubuntu1

As for finding the root cause I have no idea. Sorry.

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https://bugs.launchpad.net/bugs/774289

Title:
  No notification of Natty upgrade

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