At the moment there seems to be a problem in iTunes with the ‘download all updates‘ button. There will undoubtedly be a fix for this coming soon — word is that this is a server-side problem at the App store and nothing to do with the Lion install specifically.

In the meantime, you can still update your apps by clicking on the individual update buttons under each individual app in the same App Store Update window.

I know, a pain if you’ve got more than four or five, but a workable solution till Apple sort it their end.