Yes there is a Windows Phone 7 update being sent out this week but it is not the one your thinking of.

The update that is starting to pop up on Windows Phone 7 handsets is actually a pre-cursor to what has become known as the Cut and Paste update aka NoDo.

This pre-update is updating the Windows Phone 7 handsets update functionality in preparation for the actual update which is still rumored to be coming out around 8 March 2011.

If you run a Windows PC this process is very similar to how they prepare for a Service Pack update.

As I mentioned the other day this is a good way to test out the update mechanism all the way from the notification that comes up on your phone, the interface between the Zune software and your phone to both back up your phone data and deliver the update to the handset.

Let us know in the comments when you get your update and tell us how it went.

By the way – as of this post I have not seen this update on either of our Windows Phone 7 handsets.

If your curious what the update process looks like check out this blog post from Vikram Pendse, a fellow MVP, who provides screenshots of his phone screen as it goes through applying the update.