We've just received word from the iPhoneSIMFree team that their iPhone SIM unlock solution (which we documented on video here) doesn't send your iPhone with 1.1.1 Firmware into Activation Limbo, unlike the the other software unlocks that are out there.
This means if you unlocked your iPhone with iPhoneSIMFree—and only iPhoneSIMFree—that after updating, you can still activate your iPhone with a proper AT&T SIM, but unfortunately you still can't stick in a non-AT&T SIM to use. You'll have to wait until a new jailbreak is out for that. But it does mean good news for people who have an AT&T SIM handy. But even if that's you, you still can't install third-party apps because jailbreak isn't there.
But our recommendation still remains the same. Even though you can keep using your unlocked iPhone after updating (if you unlocked it with IPSF), you can only use it with AT&T, which defeats the point of having an unlocked iPhone in the first place. Wait until a new jailbreak is released, at the very least, to update to 1.1.1. [iPhoneSIMFREE]