3.5mm works fine but I can't get my nice C-type headset to function at all , it's like it doesn't even recognize it's plugged in , is there an update I'm not getting or something ?
You're not missing anything. Support for USB headsets has not been added yet, but we've been told since before launch that it should be supported eventually.
Find a post asking for this feature and vote it up. Waiting won’t solve anything, we have to vote up feature we want/need.
If you can't find the post, create it yourself with a clear title explaining what you want like "Support for USB headsets".