Both phones had no problems at all, both phones had custom 2.0 firmware on them.
1st phone had basic settings but no apps or music on it, upgrade time was about 20 mins because of the dumb backup thing.
2nd phone I have just finished (my real phone) took about an hour to upgrade (because of the backup thing), I also had on this phone jailbreak software.
Once the update had finished on the 2nd phone all my jailbreak software had gone however I did not have to "unlock it" to work on vodafone again and all setting and info are still on the device.
I did have to reinstall my APN from unlockit.co.nz as I was using a 3rd party jailbreak app to do my APN.
Over all very easy, just plugged the iphone into itunes, say yes to the update and go and have a coffee.
DO NOT DO THIS IF YOU HAVE CUSTOM 2.0 ON YOUR 3G