1. Connect the phone to the computer and press and hold the Power button (on top) and the Home button (on bottom front) simultaneously.
2. After about 15 seconds phone will appear to turn off, release the Power button but keep holding the Home button.
3. After about 15 seconds the computer and iTunes will detect the phone in recovery mode.
4. Download the following two files to your computer if you havent alread: 1.1.1 firmware and 1.1.2 firmware
5. Hold down SHIFT key (Windows) or Option/ALT-key (Mac) when clicking the Restore button in iTunes, and it will let you choose firmware file. Select the 1.1.1 firmware file you downloaded in previous step.
6. iTunes will give give a 1015 error, and you phone will get stuck in recovery mode.
7. To get it into normal mode, run AppTapInstaller.exe (or iNdependence if your're on a Mac). If you are downgrading from 1.1.3 you might have problems getting it started in normal mode. The solution is simple, just restore your phone to 1.1.1 again, and this time it will work
8. Now your phone should be at the activation screen.