The subversion update command did not work for me using the above procedure. The error message complained about a missing subversion file. Downloading a tarball does not appear to be a good way of setting up working copy for subversion. If you are going to use Subversion to keep up to date you may have better luck if you start off with "checking out" a working copy of Metasploit. Downloading Metasploit using Subversion takes a little longer but it works. I used this procedure:

1. Install Subverion if you do not have it already installed.
2. Create the metasploit directory, "mkdir metasploit-3.0".
3. Change to that directory, "cd metasploit-3.0".
4. Create the create a working copy of Metasploit with the command "svn co http://metasploit.com/svn/framework3/trunk/ .". Note: There is a space and a period after the URL.
5. Run the "svn update" command to make sure that subversion is working properly and you have the lastest copy of Metasploit.
6. Run Metasploit.