I am also seeing the same logs!:
Dec 17 07:59:01 iPhone subridged[1648] <Error>: __main_block_invoke92: Install error Error Domain=SUBError Code=12 "Failed to apply update" UserInfo={NSLocalizedDescription=Failed to apply update, NSUnderlyingError=0x15cd177e0 {Error Domain=MobileSoftwareUpdateErrorDomain Code=2 "Could not personalize boot/firmware bundle." UserInfo={NSUnderlyingError=0x15cd2c1c0 {Error Domain=PersonalizationErrorDomain Code=3194 "AMAuthInstallBundlePersonalize() failed: This device isn't eligible for the requested build." UserInfo={NSLocalizedDescription=AMAuthInstallBundlePersonalize() failed: This device isn't eligible for the requested build.}}, NSLocalizedDescription=Could not personalize boot/firmware bundle., target_update=13S344}}} with userInfo {
      NSLocalizedDescription = "Failed to apply update";
      NSUnderlyingError = "Error Domain=MobileSoftwareUpdateErrorDomain Code=2 \"Could not personalize boot/firmware bundle.\" UserInfo={NSUnderlyingError=0x15cd2c1c0 {Error Domain=PersonalizationErrorDomain Code=3194 \"AMAuthInstallBundlePersonalize() failed: This device isn't eligible for the requested build.\" UserInfo={NSLocalizedDescription=AMAuthInstallBundlePersonalize() failed: This device isn't eligible for the requested build.}}, NSLocalizedDescription=Could not personalize boot/firmware bundle., target_update=13S344}";
  }
Dec 17 07:59:01 iPhone Bridge[1646] <Warning>: -[COSSoftwareUpdateController _manager:didFailInstallation:withError:] - _suState: (Installing); update: (
              HumanReadableUpdateName: watchOS 2
              ProductVersion: 2.0
              ProductBuildVersion: 13S344
              ProductSystemName: iOS
              Publisher: Apple Inc.
              DownloadSize: 13036696
              PreparationSize: 315830122
              InstallationSize: 0
              TotalRequiredFreeSpace: 315830122
              DocumentationID: watchOS2GM
              MarketingVersion: (null)
              CurrentDenialReasons: (null)); error: (Error Domain=SUBError Code=12 "Failed to apply update" UserInfo={NSLocalizedDescription=Failed to apply update, NSUnderlyingError=0x1566c14e0 {Error Domain=MobileSoftwareUpdateErrorDomain Code=2 "Could not personalize boot/firmware bundle." UserInfo={NSUnderlyingError=0x15677d610 {Error Domain=PersonalizationErrorDomain Code=3194 "AMAuthInstallBundlePersonalize() failed: This device isn't eligible for the requested build." UserInfo={NSLocalizedDescription=AMAuthInstallBundlePersonalize() failed: This device isn't eligible for the requested build.}}, NSLocalizedDescription=Could not personalize boot/firmware bundle., target_update=13S344}}})
I called Apple Support and spoke to 3 senior advisors who forwarded my request to engineering a few days ago. Engineering responding asking for logs so I just replied with this. They refused to send a replacement since they are unsure if this is a hardware issue. What a nightmare!
Edit: Have a Genius bar appointment setup for Saturday to see if I can get a replacement.