I solved my U-Boot problem a few days back. Just reporting here in case it happens to anyone else.

Initial failure was due to FAM, it updated u-boot-flasher but not u-boot-tools. Second time around somehow my KP51 zImage in /boot was corrupted so mkimage failed to convert. I was able to resolve by manually deleting the corrupted zImage and reinstalling KP51 bootimage.

Also for CSSU-thumb KP51r1 and above is required. Don't forget to change default bootitem to KP51r1 as the attached kernel will not boot into Maemo with cssu-thumb installed.