In case this helps anyone else: I attempted to upgrade my iPhone to the new 2.0 operating system that was released this morning, but the phone is failing to re-activate due to "an error in the iTunes Store," leaving my phone completely disabled. I can disconnect and connect the phone from the computer to retry, but retries are failing.

So far I'm assuming this is a service outage on Apple's part due to 6 million people trying to upgrade simultaneously (and a complex upgrade process that does not properly handle this case), and I'll be able to complete the process later today. If you haven't upgraded your phone yet, you might want to wait until later today or tomorrow.

Update: Turning the phone off and on seemed sufficient, plus the fact that their network troubles have died down.