iTunes unable to activate my iPhone after 2.1 install

Same for me @ 2.1 , bricked phone 3G / Era operator in Poland

You may have been in airplane mode when you started the upgrade process. Of course the error message could have been more helpful, or the upgrade software could have forced the phone out of airplane mode.

Try this: Attempt to make an "emergency" call by entering any old number (or even a partial one) and press the call icon. Your iPhone will show a message saying that you cannot make the call while in airplane mode and will give you an option to turn off airplane mode. Once you see the bars indicating that you're reconnected to your carrier, connect the iPhone once again to your computer running iTunes and the upgrade should proceed normally.

it happened to me to, it finished the upgrade and in the display appears a message with no sim card intalled. Itried the sim card in another card and found that after the upgrade the ihone killed the sim card. the bb shows a message that says inser puk code (0 tries left) and i never tied a pin or puk code after the upgrade

Another fix.....

I had the same problem and error message after I'd finished installing the 2.1 firmware upgrade on my wife's "old" 2G (1st Gen) iPhone which is now her iPod Touch (w/camera and speaker). The SIM card was still installed since our 3G iPhones came with new SIM cards (AT&T).

Normal hard reboot ended with same iTunes error message and iPhone stuck on the activation screen.

But....

Based on suggestion from Apple Store Genius I plugged it back onto the Mac and after getting the iTunes error message again this time I hard rebooted the phone again (power and home key held down) and kept them held down during the reboot until the phone was forced into "recovery mode." It took about 20 seconds to get to recovery mode - could take 30-40 seconds based on the advice I got.

That's the key - once it's in recovery mode go ahead and reset with the factory settings (and latest firmware).

This at least will get your iPhone functioning again (in my case as an iPod Touch). The you can optionally restore from your last good backup.

Easy fix once you know the trick to forcing the phone into recovery mode.

Frank's post solved my problem too. Thanks a bunch Frank!