Backup error No More!
I finally worked through this problem yesterday. I was getting a backup error (-36) everytime I made an attempt to upgrade to 2.0. Yesterday, due to the threat that I would lose everything on the iphone, I went into iTunes and unchecked the items I was previously syncing (music, video, photos, etc.) So my iphone went from being 600MB shy of full down to about 6.8GB free space. During this process I was "in line" to speak to Apple tech support. A representative answered about the time my new sync completed. Told him my repeated problem and what I had just done. He told me I needed to uninstall any Apple software on the pc. I really didn't understand the need and proceeded with another attempt to install 2.0 so I could tell him the exact verbage and error I get. Well this time (with my iPhone nearly empty) the backup worked an the install proceeded. I told him it was working this time after unsyncing eveything and our call ended then.
I followed the onscreen commands. I got through the whole process an it gave me a message saying the phone had been successfully restored. A couple scary moments: 1) I got a "no signal could be found, you need a signal to complete the process".... I had 3 bars and my wifi icon, but no ATT or E. But it worked anyway. 2) I had a message on the iPhone screen instructing me on how to move my icons around, with a dismiss at the bottom. This was the scariest moment, I tried to dismiss and the touchscreen did not respond. At the same time iTunes had stopped responding on my pc. I uncradled the iPhone and tried a hard boot and it would not turn off. I rebooted the computer and recradled the phone and windows recognized a usb device, but as an unknown device. Unistalling that usb port and another reboot did not help. I started trying repeatedly to do a hard reboot on the iPhone, but in remained frozen on my home page (could see all my icons including the new App store icon, but the instructions on how to move the icons was still on the screen. After multiple hard reboot attempts and a very painful 10 minutes, it worked. Once it rebooted the software (under settings) was 2.0. Recradled it and Windows & iTunes reconized it appropriately. Gradually resynced item back onto the phone, testing them after each sync to ensure they synced and were functional. Finally put 2 GB of music back on and everything is working fine. Bought an App which worked as well.
Sorry for the long story, but i wanted all the details out there. Proceed with caution should you decide to do this. If you have any programs that pop up when to cradle your iPhone wanting to download the pictures onto your computer ...turn them off.