So I finally took the plunge yesterday and upgraded my unlocked, running on T-Mobile, v 1.0.2 iPhone to v 1.1.1. The process took longer than I'd anticipated (or hoped, anyway) due to a few snags. But I came out the other side with all the goodies Apple included in the v1.1.1 firmware update, access to YouTube (which I hadn't bothered trying to install before), and my T-Zones enabled EDGE data still intact.
Upgrading an unlocked and/or "Jailbroken" (hacked) iPhone to v1.1.1 is a little tricky because there are several different paths to take depending on what you've already done to your handset, how you did it, and whether or not you want to run it on AT&T's network. I had used a paid unlock service to both unlock and Jailbreak my v 1.0.2 phone, so I was supposed to have a pretty clear upgrade path. I'm still not sure if I did things out of order or just hit a snag, but I wound up having to upgrade, downgrade, and then re-upgrade my handset using Independence (a Mac application).
But I'm happy to say it now works, with access to the iTunes WiFi Store, YouTube, and third-party apps via Installer.app. Woo-hoo! If you feel like upgrading your unlocked and/or Jailbroken iPhone, try these links for starters:
Jailbreakme web-based unlock method for v1.1.1 iPhones, or Independence Mac OS X app for jailbreaking and activating iPhones, or from my original blog on unlocking the v1.1.1 iPhone.