Upgrading the iPhone (i.e. to the latest 2.0.1 firmware) while being in Flight mode is a bad idea ™. The upgrade works fine, but as soon as the iPhone reboots and needs to be activated through iTunes it complains:

The iPhone cannot be used with iTunes because the information required for activation could not be obtained from the iPhone. Check that the SIM card is inserted in your iPhone and that it is not PIN-locked.

Ok. There is a SIM in the phone but it can’t be activated. Because it is in Flight mode and therefore never requests a PIN for the SIM. Bricked my iPhone? Need to recover ? No, just get out of Flight mode by going to the “emergency call” screen, entering any number and trying to call it. The phone will complain about being in Flight mode and request the PIN for the SIM card. Voila, activation works like a charm!

So, please Apple, make your error messages a bit more descriptive!
And users, get out of Flight mode before upgrading the iPhone!

(Original instructions can be found here; but be aware, there is no need to reset the phone!)