steve-o-lution,
It looks like you’re hitting a snag on one of the most intensive parts of the upgrade, which is the conversion of your 1.6.9 database to UTF-8 encoding. The good news is that this is a one-time conversion you won’t ever have to do again.
The database conversion may be taking too long in part due to the speed of the server, and the server is imposing a time limit on the updater script. EE tries to work around this, but the server has a final say.
Do you have a local development environment such as MAMP or WAMP? If you get your 1.6.9 site up and running locally there’s a good chance the upgrade will go much faster there and you won’t run into an issue.