WOO HOO! After 2.5 hours, finally updated to 2.0! I just kept doing the old click back and forth between iPhone and items in my iTunes Library.
I think they are getting things straightened out now. Either the initial rush and demand on the servers is either slowing a bit or they have gotten more servers online to help with the process.
Has this been this a frustrating experience? Yes, very much. As any kind of waiting with today's technology will do that to you. All I can say to those still waiting, is be patient, try to do other things to occupy and pass time as well as just keep clicking back and forth.
I would say based on what I have read here and my experience, it looks like anywhere from 1-3 hours of an un-active iPhone, so, be somewhat patient and it will all come together nicely before you least expect it! Sure caught me by surprise when it finally worked!