iPhone 2.0 (5A347) Software Now (Sort Of) Available
In anticipation of the iPhone 2.0 Software launch on Friday, Apple has added the software to its Software Update file. Although not currently available via iTunes, you can now download the iPhone 2.0 update for original iPhones directly from Apple. Once downloaded, the update can be used to update your iPhone by holding the Option (Shift on Windows) key and clicking “Update” in iTunes. Select the .ipsw file, and you’re all set.
Additionally, Apple notes in a guide they have posted that updating to the 2.0 software will erase any 1.0 phones:
Normally if you choose to update, the iPhone or iPod touch software is updated but your settings and media are not affected. If your device currently has a software version prior to 2.0 (1.x) and you are updating to software version 2.0 or later, all data on your device will be erased in order to perform install the new software. In this case, iTunes will offer to create a one-time media backup of your device depending on what content is on your device and what content is stored in the iTunes Library you are connected to. You should ensure that you have enough free space on your Mac or PC to accommodate a backup that matches the capacity of your iPhone or iPod touch (4 GB, 8 GB, 16 GB, or 32 GB) if you proceed with the this backup.
iTunes version 7.7 is required in order to update. We do expect the update to appear by normal means soon, so those who are leery about this kind of thing may be better off waiting.