I've never been phished before, its fucked up because it comes from the app. Not being mean towards you this is fucked up. they need to pull the service if they can't run it decently
It was a vulnerability. The Electrum servers (which anyone can run due to its descentralized nature) could make the Electrum wallet connected to it show a customized error message. So, the hacker deployed a bunch of malicious servers they showed the please update message you say.
When dealing with money, you should never put your guard down. Verifying the signatures of the binaries should be a mandatory step when downloading/updating Electrum.
Anyways, the vulnerability has been fixed in the latest version which was launched a few days ago and that you didnt have. Unfortunately, its too late now. Sorry.