I have the same:
20-12-31 10:50:27 ERROR (SyncWorker_3) [supervisor.docker.interface] Can’t install homeassistant/raspberrypi4-homeassistant:2020.12.2 -> 500 Server Error for http+docker://localhost/v1.40/images/create?tag=2020.12.2&fromImage=homeassistant%2Fraspberrypi4-homeassistant: Internal Server Error (“Get “https://registry-1.docker.io/v2/”: net/http: request canceled while waiting for connection (Client.Timeout exceeded while awaiting headers)”).
It seems like a network issue. If you are having trouble updating. Wait a few hours and try again. I notice when I look at the system log again, it shows all green.
I was on core 2020.12.1, supervisor 2020.12.7 and OS 5.8
In the supervisor dashboard I saw core update to 2020.20.2 and OS update to 5.9 and tried to update core first, it failed at first try with the error
21-01-01 12:00:42 INFO (SyncWorker_4) [supervisor.docker.interface] Downloading docker image homeassistant/raspberrypi4-homeassistant with tag 2020.12.2.
21-01-01 12:00:57 ERROR (SyncWorker_4) [supervisor.docker.interface] Can't install homeassistant/raspberrypi4-homeassistant:2020.12.2 -> 500 Server Error for http+docker://localhost/v1.40/images/create?tag=2020.12.2&fromImage=homeassistant%2Fraspberrypi4-homeassistant: Internal Server Error ("Get "https://registry-1.docker.io/v2/": net/http: request canceled while waiting for connection (Client.Timeout exceeded while awaiting headers)").
21-01-01 12:00:57 WARNING (MainThread) [supervisor.homeassistant.core] Updating Home Assistant image failed
tried again and updated successfully-
21-01-01 12:07:57 INFO (SyncWorker_7) [supervisor.docker.homeassistant] Starting Home Assistant homeassistant/raspberrypi4-homeassistant with version 2020.12.2
21-01-01 12:07:57 INFO (MainThread) [supervisor.homeassistant.core] Wait until Home Assistant is ready
21-01-01 12:08:58 INFO (MainThread) [supervisor.homeassistant.core] Detect a running Home Assistant instance
21-01-01 12:08:58 INFO (MainThread) [supervisor.homeassistant.core] Successful started Home Assistant 2020.12.2