We just got off the phone with the Death Star Support Troopers (the AT&T Customer Support team) to pay our final bill and cancel the AT&T wireless account. The negative effects of the 1.1.1 firmware update convinced us to *not* apply the Apple update until the Dev team has released a "virgin application" and/or method for working around the "Invalid SIM issues". Apple Computer and AT&T are definitely forming an Evil Empire.
Instead of updating, we'll keep using the version 1.0.2 firmware that is fully unlocked and fully functional with the T-Mobile EDGE setup. Yes, this puts our iPhone to a time warp, so to speak, but we'll live... happily and Empire-free. NOTE: We did keep our AT&T SIM chip. Just in case we should need some type of support from Apple in the future, we can pop-in the AT&T chip before heading into the store.
Sure, the new features of the 1.1.1 update are appealing (not the Wi-Fi iTunes Music Store, but other stuff like increased speaker volume, TV out, etc.) but *not* more appealing than being able to use a T-Mobile account, install third party applications and custom ringtones, or have unfettered access to the Apple iPhone.
With the decision made to quit using the Death Star airwaves, we made the call. It was easy and the Empire actually waved the cancellation fee, after our explanation that the cancellation was purely because of satisfaction issues with the iPhone. When asked what issues, we simply replied "...you name it..." and then recalled items from various forum threads - stuff like display issues, low sound and ringer volumes, and less than the touted battery life. We were very careful to *not* specifically say these things happened to our iPhone, but the implication was there given we started the response with the general "...satisfaction issues with the iPhone" statement.
Along the way, we never mentioned the early termination fee, just the desire to pay the final bill (the monthly bill we happened to have in hand.) In turn, the Support Trooper apologized for the issues, reminded us that there are 59 days to re-activate without a fee, and that they were waving the termination fee since we had (a) paid full price on iDay, and (b) been a good customer for the past three months. When the Trooper mentioned the termination fee being waved, we acted surprised "...hadn't even thought about a termination fee..." and appreciative they were so helpful. The 59 days to re-activate seems cool too, just in case the #iPhone Dev team develops a solution, and we would need to go back to AT&T as a part of said solution.
So, there you have it, a smart decision to stay far away from the 1.1.1 firmware update and an even smarter decision to leave the evil Empire... at least for now.