There was no system updates option for me either while the watch was updating. However I did eventually get the update to load. I had to wipe the watch, uninstall the app from my P8P and forget wifi, turn off Bluetooth. The. I powered the watch on, waited to the pairing screen, turned on Bluetooth, downloaded the app, used the setup prompt to turn on wifi and connect. Then the update worked, but it took seriously 1.5+ hours to update, it didn't look like the loading bar was moving at all for the first 30 minutes.
The watch app still says there was an error and it needs to reset the watch but I'm afraid of attempting that again