Just did exactly that from 1.0.2 to 1.1.4 myownself. Worried I was too!
But I went and got the lastest ZiPhone 2.5 app, and installed same on my box. Then went to iTunes and hit RESTORE....that made the iPhone non-functional I believe. Then I opened up ZiPhone on my box, and it found the iPhone right away...and all I did was click on the DO IT ALL button. Watched for like 4 or 5 minutes while scrolling text appeared on the iPhone (sweating that what I was doing was okay) and then it restarted....
I then tested each and every functional 'stock' iPhone button - they all worked. My SIM card is from Rogers (a pay-as-you-go one) and calls could be made perfectly. I then opened up Installer (as it's automatically loaded onto the iPhone during the ZiPhone fix) and re-installed the few apps I use (Summerboard and some themes, iSolitaire etc.)
Once that was ALL done....I had a working running iPhone with 3rd party apps. I did however have some problems getting either iBricker or iPhoneBrowser to run properly, but then I found (here on this forum) enuff info to install the ZiPhone iBricker fix, which seems to help...but not quite completely on my own iPhone...so I ran ZiPhone completely one more time.
And all is well. This process exactly as I've laid it out here, worked for me and while I'm a PC guy (read no mac skills or box here) and never ever go to iTunes itself, I'm a happy user!
I'd search the forums here completely and read everything you can find on 1.1.4 and then decide if you think you can do all of this.... I'm a vetran PC user and can handle anything MS offers (boy, that conjures up an image, eh?) so this mac stuff is all "alien" to me...but it worked!
Kudos to the ZiPhone dev and all others on this....iPhones are really really cool....my old Blackberry gathers dust!