Don’t Update. . .Yet
November 21, 08 by DougAfter reading a tip from the iPhone Dev Team. . .
* 2G (1st gen) iPhone users who cannot wait for the new PwnageTool or QuickPwn can safely “Update†to 2.2 using iTunes, this will preserve the existing activation. However “restoring†to 2.2 using iTunes will return the iPhone to the unactivated state. If you are in any doubt just wait. NB: This works for 2G ONLY.
However, before the update process could begin, iTunes says ‘Your iPhone could not be updated at this time’, and then resets back to the iTunes home screen. Now the iPhone is stuck in restore mode and I have to restore back to 2.1(since I have to activate it).

charlieb620 Says: 25.11.08 at 9:06 am
i updated and jailbroke my iphone and everything is fine.