I am actually from the US. I have the original 8GB iPhone, and my service provider is AT&T. I'm having the exact same problem that everyone else is having. I keep getting the same error. iTunes does not recognize my iPhone when iTunes runs the diagnosis application. So, I guess this is also a US issue, which I really hope can be resolved sometime soon!
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Update to carrier settings dialogue occurred before update to 2.01 and then failed as per everyone else.
I never instructed it to occur- it was automatic.
Back-ups on synch have been excruciatingly slow - really don't know why.
No difference now updated to 2.01
VIRGIN 3G in Australia (on OPTUS network)
I'd assumed it was something the telcos came up with - their understanding of Mac stuff is incredibly minimal.
It seems that Apple has removed the carrier update. It is no longer offered through iTunes update. At least for T-Mobile, Netherlands... The error message has therefor gone.