Having heard much about the new legit apps available for the iPhone (in addition to the apps already available for unlocked iPhones through Installer.app), I decided to take the plunge and upgrade my jailbroken 2G iPhone on Sunday. Here are the steps that were required. You'll see where this went horribly wrong:

  1. Download latest Pwnage tool. 
  2. Download 2.0.1 ipsw file from Apple.
  3. Run Pwnage and create custom ipsw to upgrade iPhone to 2.0.1 pwned.
  4. Put phone into DFU (device firmware upgrade) mode.
  5. Run iPhone restore in iTunes 7.7. Accidentally restore with Apple's official 2.0.1 instead of pwned 2.0.1 iPhone says: Bye bye. No legit SIM card.
  6. Bang head against wall. Threw out original AT&T SIM card. Now bottom of Chinese landfill somewhere. Idiot. Idiot. Idiot.
  7. Try to restore again with pwned 2.0.1.  Fail.
  8. Download and try to restore with 1.1.4. Fail.
  9. Weep at prospect of manually re-entering 200 contacts into old Nokia candy bar phone as triage solution.
  10. Google furiously for an hour. Construct apparently workable plan.
  11. Go to the gym. Not strictly speaking necessary, but helped me to work out my frustrations.
  12. Go home. Backup 30GB of music and iTunes library files to external drive. (Not strictly speaking required, but seemed like a good idea.)
  13. Download iTunes 7.5 from Apple.
  14. Uninstall iTunes 7.7.
  15. Put phone in DFU mode. Attempt to restore 1.1.4. Receive dreaded 1605 error (bad).
  16. Uninstall iTunes 7.5. Open Terminal and enter "never use this mode" mode. Use command line to clear out iTunes 7.7 cruft.
  17. Reinstall iTunes 7.5. Now it looks like a truly clean install.
  18. Put phone in DFU mode. Successfully restore 1.1.4. Still wants a genuine sim card.
  19. Run iJailbreak (how I originally unlocked the phone). No joy.
  20. Run ZiPhone despite stern warnings not to. Success! A pulse!
  21. But wait: WiFi and iPod functions all fine. But no telephone connectivity. Baseband firmware upgraded in my 2.0.1 install but didn't downgrade with 1.1.4 recovery. I now have a really expensive, extra-thick 16GB iPod Touch.
  22. Run Pwnage again. Needs iTunes 7.7.
  23. Uninstall iTunes 7.5. Install iTunes 7.7. Drop backup of library file back into iTunes folder. Works a charm. All my music back where it's supposed to be. Sigh of relief.
  24. Run Pwnage again. Create new pwned 2.0.1 ipsw.
  25. Put phone into DFU mode. Restore with iTunes 7.7 using the goddamned pwned 2.0.1 I should have used in the first place.
  26. Works like a charm. Pwnage re-flashes the baseband. Phone comes back to life perfectly clean with 2.0.1. All functions accounted for.
  27. Rebuild phone preferences, music, photos, mail accounts etc. Too scared to restore from backup.
  28. Try out new functions. So so. Some useful stuff, but angels don't sing. Such is life. At least I can check my work e-mail, which lives on an exchange server, without using the teeny-tiny Safari window and the crippled non-IE Exchange webmail.

All in, about a six hour process for what should have taken twenty minutes if I'd been paying attention. Lesson: Never undertake upgrades after two cups of really strong coffee. Also, this website was the best one in terms of talking through this situation, in case you find yourself in similarly dire straits.