hold down the sleep & home buttons for 10 seconds, after 10 seconds release only the lock button, while still holding the home button for approx 15 more seconds.
a message will pop up in itunes saying it has found an iphone... needs to be restored... hit ok.
now, hold shift and click restore, then point itunes to the 1.0.2 ipsw (get that here)
it should restore for a while, then an error will come up at the end, it ok, and quit itunes
get a copy of the apptapp installer here and open that up
click continue, then select the 1.0.2 firmware and hit next. after a while this will also return an error, but itunes will recoginze your phone.
this will work, if itunes gives you an error before you select the firmware file as in step 4, you are not putting the phone into the correct restore mode, the screen on the iphone will be blank. there should be no logos, icons, nothing on the screen. redo step 2 until you get it right.