Microsoft SQL server 2005 updating 2.5 million records fails

I am trying to update 2.5 million records and I just time out after about 30 seconds.  I am on the server itself using the management studio I was to update a null field based on another field here is the query.  I am then going to need to loop or use a cursor to iterate over each record and look it up in a table to pull the state and timezone for each area code.  It this a time out issue or on index issue or am I just doing something dumb?

UPDATE    CallRecords
SET              AreaCode = RIGHT(LEFT(PhoneNumber, 4), 3)
WHERE     (AreaCode IS NULL)

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