I literally just said that I have updated it :L
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I've updated it and I still don't have the video option :')
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That is really weird..
The only thing I can think of is that you needed 2 updates, and you updated the first one. I had to manually find the update for Instagram.
I think Vine will stay popular with iOS because from what I've heard their app works. The Android one is just terrible and should never have been released in the state that it is. This Instagram update will definitely deter Android users from Vine, and it wouldn't surprise me if Instagram starts edging out on iOS as well because people will prefer having one app to do everything.
Not something I'd use a lot to be honest as when I am shooting videos I usually need decent length
I still haven't even got a modern enough phone to have Instagram on, maybe in five years. :P