I am running snow leopard
I have not updated to 'Lion' yet on my iMac. I tried it twice but received error messages. One of them stating that 'a recovery disk could not be created'. Another simply telling me that 'Lion' could not be installed. I guess (from what I read) 'Lion' doesn't like my partitioning scheme (Windows XP).
The bizarre thing is that I have an identical setup on my MacBook. And the 'Lion' installation went smoothly. No error messages, nada.
I'm still scratching my head looking for an explanation....