Simply leave out the
driver=, I'm running both 3Bs and 0Ws successfully in hostapd mode this way.
And don't run
raspi-update unless explicitly told to do so due to a very specific kernel bug and the diagnosis points towards a fix that is only available yet via the testing kernels. This isn't the case here. The Wifi TOS bug shouldn't be a problem here, it typically manifests in stalled SSH sessions or NTP not synchronizing. And only then go out on the limb and do
raspi-update, but be sure to make a working backup to another mSD card first, so you can swap that in in case the newer kernel and modules cause more issues than it does fix.
raspi-update you are installing test kernels that might break things. Hostapd runs fine on stock mainline kernels. I can't understand why people instruct others to run
raspi-update when there isn't a good reason why, and they don't inform others what a
radpi-update may cause and thus to be prepared...