This is an email I received and here is the reply and help I gave, hopefully it can help other people get there iPhones working.

Original Message:
Hey Ronald… there was this stupid upgrade option on my itunes & i clicked on it.. I REPENT !
not slept in 24 hrs trying to get my phone back working… i tried to DFU & restore 1.1.4, but then while the process is on it gives me a 1601 error.. I have no clue what to do & i want me phone back!!
Wiil be great if you can email me details..
My phone is upgraded to 2.0.1

My Reply:
I’ve been there. I didn’t get my iPhone back working for an entire week. Luckily I found out how to fix it. Actually multiple ways to fix it, but here are the two best ways to fix it in your situation:

The best way to get your phone back working is to restore back to firmware 1.1.4 or you could use the iPhone dev teams pwnage tool to unlock your 2.0 iphone, just read below:
(http://blog.iphone-dev.org/)
///
NOTE:
*u cant unlock ur iphone unless u have a 04.04.05 baseband

*and also to restore your iphone back to 1.1.4, you cannot use the 2.0.1, first restore your iphone to the original 2.0 ispw before you begin. You can find it on the web somewhere. Theres two versions of 2.0, and I think your using the newer patched one.

Here is the original 2.0: http://appldnld.apple.com.edgesuite.net/content.info.apple.com/iPhone/061-4955.20080710.bgt53/iPhone1,2_2.0_5A347_Restore.ipsw

Once you’ve restored it to the original 2.0, continue below.
-If you have restored to iPhone 2.0 original firmware, then just download this:
http://thebigboss.org/repofiles/nonrepo/PwnageTool_2.0.zip
or
http://fsa.0xfeedbeef.com/PwnageTool_2.0.zip
(its the iPhone Pwnage Tool 2.0, it can unlock your 2.0 iphone on original firmware.)
///
///——IF YOU WANT VERSION 1.1.4 LOOK CONTINUE—>>>
First there’s a few things you need.
1. Uninstall iTunes 7.7 and install iTunes 7.4
2. Your going to need the ZiPhone program 3.0 or the latest
3. Your going to need firmware 1.1.4 ispw ready (i assume you do)
4. Your going to need a “special” patched version of ZiPhone - (you can download here: http://www.iphone-hacks.com/downloads/file/108)

/// After you have all that your ready to go…
1. Put your phone into DFU mode using the ORIGINAL ziphone software GO TO Adavnced Features .. its there. - If this does not work do it manually, its hard to get it in DFU mode, but its capable. When DFU mode is on, your computer will recognize your iphone, but the screen will remain black like it was off.

2. Using the downgraded iTunes Click + shift+”Restore” on Win or option+”Restore” button and point to the 1.1.4 firmware you downloaded from requirements. (If you get an error that starts with
16xx, restart your computer or just use another one)

3. After completion, you’ll see an Error 1015 message or something similar. That’s ok.

4. Click NORMAL MODE using the ORIGINAL zIphone .

5. Close any other unlocking tools you may have opened in step 4.

6. Run the PATCHED zIphone you downloaded at the first step #3. Make sure you select the “Baseband downgrading” checkbox and hit “Start”.

7. After finishing, you’re back to normal. You can unlock your phone using the ORIGINAL ZiPhone

===========That will get you back to version 1.1.4, mos def.