After starting my journey from 1.1.1 till 2.1 was smooth and no problems with jailbreaking or unlocking, thanks to the great DEVs. Yesterday after updating Itunes to 8.02, found that it is not detecting my Iphone 2.1. I had to reinstall itunes to get it detect my iphone 2.1. It seems problem had already started but I didnt noticed.
I then decided to restore to 2.2. As soon as I put the iphone into restore mode after clicking shift + restore, I got error 1602 after sometime. Now the phone was stuck in recovery mode and itunes didnt detected the iphone. I had to again reinstall the itunes but again same error. I tried on different computer also but it didnt helped. Spent almost like 8-10 hours yesterday and today.
Today I found a new update to Windows XP pro Service pack 3. After I did the update to the windows and again started the process, this time the itunes started the restore process perfectly. Finally Im on 2.2 and jailbroke it QuickPwn 2.2.
Hope this helps to someone facing similar problem.