I don't know if this will help anyone else, but I was having a similar if not the same problem--my iPhone wasn't being recognized by iTunes. iPhoto would open just fine but not iTunes. I tried the hub solution, which didn't work for me. I was going to go online and order a PCMCIA USB 2.0, and in the meantime I had made some changes to a few contacts in my address book. When I plugged my iPhone in to see if it would sync the contacts at least, voila! EVERYTHING synced and iTunes opened up, no problem.
I have tested this solution three times, all successfully. So, for those of you with this problem of only having a 1.0 or 1.1 USB, just make one change to a contact in your address book and see if this solves your problem. 🙂