Stay away from iPhone 2.2.1 Update : Updates Baseband to 2.30.03, Breaks yellowsn0w!
UPDATE : Custom Firmware comes to the rescue.
Apple sneaked in a worthless firmware update (2.2.1) to thwart the attempts of Dev Team to unlock the iPhone 3G via software means. Please stay away from the update till a patched firmware without the baseband update is released. I repeat, baseband cannot be downgraded and since Apple patched the baseband exploit, 2.30.03 which comes as a surprise with 2.2.1 is not unlockable by any means at this time. Save yourself some headaches and enjoy your iPhone as you are till yesterday! Any prompt for updates should be ignored.
iPhone firmware update 2.2.1 improves the stability of MobileSafari. The firmware also fixes an issue where images saved from Mail.app sometimes display improperly in the camera roll. We can definitely live without these updates but yeah, a patched firmware is the key to all the yellowsn0w hopefuls!