With coders now being accepted into Apple's iPhone Developer program and receiving the OS 1.2 beta software, we're learning a lot -- and it's not all pretty.
As previously reported, Apple's documentation states: "Once you install the pre-release iPhone OS on your device, such device may only be used for development and testing purposes until the final (GM) version of the iPhone OS is released. In addition, you will need to install new versions of the software from time to time throughout the beta period. Failure to install the most current version will, after a period of time, put your device in a deactivated state."
We've now learned that the OS 1.2 software also upgrades the iPhone's baseband, meaning that the iPhone cannot be downgraded to a prior release. As such, once a development phone, always a development phone (until the final version of 1.2 [2.0?] is released).
Installing iPhone OS 1.2 also disables the phone's radio, so you can't make phone calls. That is, unless you unlocked your iPhone using an unofficial method prior to installation.
So essentially, once you install 1.2, your iPhone can no longer make phone calls, and the device will self-destruct if you don't comply with Apple's update policy. Users of leaked copies of iPhone OS 1.2 beware.
Word from the hacking community is that patches for these issues do exist, but such patches haven't yet been released.