If you have a 1.0.2 phone and you click on itunes and take the 1.1.1 or 1.1.2 update, you will unfortunately have a bricked phone that won’t make calls but will work on Wifi. There are a host of ways to fix this, but here are some folks who can help:

iPhone 1.1.1 Special Report: Native apps, unlocking/unbricking, troubleshooting – iPhone Atlas

# Downgrade your iPhone to firmware/software 1.0.2 if you are currently using a “bricked” 1.1.1 iPhone.
# Jailbreak your iPhone. The simplest method for this is to use AppTapp.
# Once Installer.app is on your phone, use it to install the BSD Subsysem and OpenSSH (both under “Subsystem.”)
# Download the re-virgizining tool,
# Follow this guide to use the re-virginizing tool to restore your phone to a factory-fresh state.
# Using iTunes, update your iPhone to software/firmware 1.1.1 and make sure it works normally (it won’t be unlocked at this point, but should work with AT&T SIM cards)
# Jailbreak your iPhone again using this guide for Mac OS X or this automated tool for Windows.
# Put AnySIM for iPhone software/firmware 1.1.1 on your iPhone using this guide for Mac OS X or this guide for Windows.

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