A bit late to the party, I started the process of updating my iPhone at 3:00 PM Eastern. iTunes downloaded the update without a problem, but the install process was halted with the error message:
"The iPhone [your iPhone] cannot be updated at this time because the iPhone activation server is temporarily unavailable. Please try again later."
From there I've got two options: OK, which simply closes the dialog box, and More Information, which points a browser to a Knowledge Base article on iPhone activation issues. Mike also noted the appearance of an error -4 dialog earlier.
It looks to us like Apple's servers are getting slammed hard. A bit of patience ought to do the trick; you might also benefit from restarting both iTunes and your iPhone. Still, the whole thing makes me feel like Veruca Salt: "But I want an Oompa Loompa NOW!"
Source : http://www.tuaw.com/2009/06/17/some-reports-of-itunes-issues-while-upgrading-to-3-0/
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