ok i fixed it
1. Put the iPhoto.app in the trash (Drag it from your Applcations Folder to the trash)
2. Go to HD/Library/Receipts and remove any pkg file there with iPhoto in the name
3. Re-install iPhoto from your iLife DVD or the second DVD that came with your Mac.
4. Run the iPhoto 8.1 update again.
Should work now.