I just upgraded Zainab’s iPhone 2G (purchased from an Apple Store in the US) today from OS version 2.1 to 2.2.1. Originally this iPhone was unlocked using iJailBreak on 1.1.4 and then was jailbroken/unlocked on 2.0/2.1 using PwnageTool.
The instructions I read were to upgrade to 2.2.1 using iTunes and then run QuickPwn to jailbreak/unlock the iPhone 2G. Interestingly, after I upgraded to 2.2.1 using iTunes (without any custom IPSW – downloaded the release from Apple) the phone upgrade went without a hitch and the iPhone remained unlocked after the upgrade. That was a surprise.
Of course the phone is not jailbroken but I have no interest in that and it seems that once an iPhone 2G is unlocked there are at least some circumstances where it will remain so after a normal upgrade using the official IPSW.
So right now she’s using an iPhone 2.G with 2.2.1 OS without any jailbreaks or custom hacks, but with a non AT&T SIM. That’s from my POV ideal and a pleasant surprise.