Maybe considered rather OTT, but with a reasonable period of time already given to sort this out, and the evidence of the frequency in general discontent with these upgrades, I might just think about taking the resolution to the small claims court. Of course, it might not be a small claim, since one could argue that they have rendered your car/s unusable (safely) and as such the claim would be for reimbursement of the market value of the car, or the cost to get it independently repaired/returned to its previous serviceable condition.
Whether this claim is made against VAG or the dealer who carried out the update ( the dealer I guess) is open to debate. VAG have understandably already been subjected to criticism over the whole issue - which has resulted in the need for these so called updates. To my mind, it is now time for some publicity in respect of round 2 citing such cases as yours where these updates cause issues which were not present before.
Have you considered taking this to the national press or consumer programmes such as Watchdog?
Good luck with getting getting this sorted, although it should not depend on luck.
Kind regards,
Gareth.