Hi,

I am having exactly the same issue using develop branch and latest commit:

$ git pull origin develop
From https://github.com/cloudfoundry/cf-release
* branch develop -> FETCH_HEAD
Already up-to-date.
$ git checkout develop
M src/etcd-release
M src/github.com/cloudfoundry/cf-acceptance-tests
M src/hm9000
M src/loggregator
M src/smoke-tests
M src/uaa
M src/warden
Already on 'develop'
Your branch is up-to-date with 'origin/develop'.

[roberto(a)oc4828837525 cf-release]$ ./update
....(output ommitted)
Submodule path 'src/etcd-metrics-server': checked out '90c444c7f93cacb998e45c46f1e06ecf4c8eb9c4'
Submodule path 'src/etcd-release': checked out '2a1cbbf8772f7c2887ac3b8a75b1114dbcd9d9d6'
Submodule path 'src/etcd-release/src/github.com/cloudfoundry-incubator/candiedyaml': checked out '29b4d9cda9fd156adea631d790c95d37ee6ab8e6'
Cloning into 'src/github.com/cloudfoundry-incubator/cf-test-helpers'...
^C
[roberto(a)oc4828837525 cf-release]$ Failed to recurse into submodule path 'src/etcd-release'