Settings freeze "kiss of death"
The only way I have figured out how to recover is to do a special reset while the iPhone is attached via USB cable to your computer. If you experience freeze up most likely the iPhone will not bootup. Trying to reboot for hours will for some reason cause the battery to get hot and may cause further damage. Also foget hoping that the iPhone will mount in this condition.
Do this, once you have attached your iPhone to your computer do press the sleep / wake button while also howding down the home button. Once the Apple logo comes up release the sleep / wake button immediately and continue hoding down the home button for another 10 - 15 seconds. At this point the iPhone will mount and you can do a restore. If you have not gone through the agony of waiting for the backup every time and instead stopped the restore you will get a restore corrupt message and you must set up the iPhone as "new".
I am a proud Apple user since the days of the Apple 2e (1984). I am sorry to say that I am a little disappointed in Apple rolling out the 2.0 software and 3G at the same time. So far this has caused me to be without a phone for 3 full days, Not a good thing when I must keep tabs on my ailing 88 year old dad.
OK, enough of the rant. I would suggest not at all seleting settings while away from your computer, this may be dangerous to your health until Apple corrects this problem. I would be VERY CURIOUS to hear of anyone else having this problem. After all this happened to me on two different iPhone 3G's now. One of those iPhones was only 2 days old.
Thanks for any comments
Ken
20" 2.16 Gig iMac Core 2 Duo, Mac OS X (10.5.4), 3 gigs of memory, 5 TB of ext HD space, 16 GB iPhone 3G, 32 GB iPod Touch