I enabled verbose output on upload and this is what I got....it looks like some communication with the device is happening....
Binary sketch size: 1026 bytes (of a 32256 byte maximum)
C:\Program Files (x86)\arduino-1.0\hardware/tools/avr/bin/avrdude -CC:\Program Files (x86)\arduino-1.0\hardware/tools/avr/etc/avrdude.conf -v -v -v -v -patmega328p -carduino -P\\.\COM3 -b115200 -D -Uflash:w:C:\Users\username\AppData\Local\Temp\build2370847195854850872.tmp\Blink.cpp.hex:i
avrdude: Version 5.11, compiled on Sep 2 2011 at 19:38:36
Copyright (c) 2000-2005 Brian Dean,
http://www.bdmicro.com/ Copyright (c) 2007-2009 Joerg Wunsch
System wide configuration file is "C:\Program Files (x86)\arduino-1.0\hardware/tools/avr/etc/avrdude.conf"
Using Port : \\.\COM3
Using Programmer : arduino
Overriding Baud Rate : 115200
avrdude: Send: 0 [30] [20]
avrdude: Send: 0 [30] [20]
avrdude: Send: 0 [30] [20]
avrdude: Recv: . [14]
avrdude: Recv: . [10]
AVR Part : ATMEGA328P
Chip Erase delay : 9000 us
PAGEL : PD7
BS2 : PC2
RESET disposition : dedicated
RETRY pulse : SCK
serial program mode : yes
parallel program mode : yes
Timeout : 200
StabDelay : 100
CmdexeDelay : 25
SyncLoops : 32
ByteDelay : 0
PollIndex : 3
PollValue : 0x53
Memory Detail :
Block Poll Page Polled
Memory Type Mode Delay Size Indx Paged Size Size #Pages MinW MaxW ReadBack
----------- ---- ----- ----- ---- ------ ------ ---- ------ ----- ----- ---------
eeprom 65 20 4 0 no 1024 4 0 3600 3600 0xff 0xff
Block Poll Page Polled
Memory Type Mode Delay Size Indx Paged Size Size #Pages MinW MaxW ReadBack
----------- ---- ----- ----- ---- ------ ------ ---- ------ ----- ----- ---------
flash 65 6 128 0 yes 32768 128 256 4500 4500 0xff 0xff
Block Poll Page Polled
Memory Type Mode Delay Size Indx Paged Size Size #Pages MinW MaxW ReadBack
----------- ---- ----- ----- ---- ------ ------ ---- ------ ----- ----- ---------
lfuse 0 0 0 0 no 1 0 0 4500 4500 0x00 0x00
Block Poll Page Polled
Memory Type Mode Delay Size Indx Paged Size Size #Pages MinW MaxW ReadBack
----------- ---- ----- ----- ---- ------ ------ ---- ------ ----- ----- ---------
hfuse 0 0 0 0 no 1 0 0 4500 4500 0x00 0x00
Block Poll Page Polled
Memory Type Mode Delay Size Indx Paged Size Size #Pages MinW MaxW ReadBack
----------- ---- ----- ----- ---- ------ ------ ---- ------ ----- ----- ---------
efuse 0 0 0 0 no 1 0 0 4500 4500 0x00 0x00
Block Poll Page Polled
Memory Type Mode Delay Size Indx Paged Size Size #Pages MinW MaxW ReadBack
----------- ---- ----- ----- ---- ------ ------ ---- ------ ----- ----- ---------
lock 0 0 0 0 no 1 0 0 4500 4500 0x00 0x00
Block Poll Page Polled
Memory Type Mode Delay Size Indx Paged Size Size #Pages MinW MaxW ReadBack
----------- ---- ----- ----- ---- ------ ------ ---- ------ ----- ----- ---------
calibration 0 0 0 0 no 1 0 0 0 0 0x00 0x00
Block Poll Page Polled
Memory Type Mode Delay Size Indx Paged Size Size #Pages MinW MaxW ReadBack
----------- ---- ----- ----- ---- ------ ------ ---- ------ ----- ----- ---------
signature 0 0 0 0 no 3 0 0 0 0 0x00 0x00
Programmer Type : Arduino
Description : Arduino
avrdude: Send: A [41] . [80] [20]
avrdude: Recv: . [14]
avrdude: Recv: . [03]
avrdude: Recv: . [10]
avrdude: Send: A [41] . [81] [20]
avrdude: Recv: . [14]
avrdude: Recv: . [04]
avrdude: Recv: . [10]
avrdude: Send: A [41] . [82] [20]
avrdude: Recv: . [14]
avrdude: Recv: . [04]
avrdude: Recv: . [10]
avrdude: Send: A [41] . [98] [20]
avrdude: Recv: . [14]
avrdude: Recv: . [03]
avrdude: Recv: . [10]
Hardware Version: 3
Firmware Version: 4.4
avrdude: Send: A [41] . [84] [20]
avrdude: Recv: . [14]
avrdude: Recv: . [03]
avrdude: Recv: . [10]
avrdude: Send: A [41] . [85] [20]
avrdude: Recv: . [14]
avrdude: Recv: . [03]
avrdude: Recv: . [10]
avrdude: Send: A [41] . [86] [20]
avrdude: ser_send(): write error: sorry no info avail