Dont panic!
Story here
http://tinyurl.com/25c6ch
The WGA service (which checks the legality of your copy of Windows) has crashed worldwide and some folks who try to get updates report they just can't get them, or worse, their copies of Windows are being determined as invalid (i.e. illegal).
MS has just fixed this error. I got this last week when i went to update only to get told my windows is not genuine. Did another update today and all was fine.