The HTC Hero Android 2.1 update has been a while in coming but it is now finally available (both packages). In order to install the update, you first need to go to the HTC support section and install the FIRST package. This then prepares your device for the SECOND package, which is sent over the air (your device is prompted to download it when it next checks for updates). However, if you have already installed the first package, you can manually search for (and download) the second package by navigating to:
Settings> About Phone> System software updates> Check Now.
The device will then check for updates and you will be prompted to download the update. Please be aware that you should use a WiFi connection in order to save on data usage. It is also advisable to backup any important data on the device as it may be wiped during installation. Once you begin the download and installation, it takes about 15 minutes. Once its complete your Hero is updated to Android 2.1!