Yet more misery as O2 faces its worse day yet, with what should have been the highest-profile, most successful product launch yet swiftly degenerating into a shambles.

Following the Web site fiasco of earlier this week, and the sheer madness of failed activation systems prohibiting purchases at stores, now iPhone owners are being hit by deeply annoying locked phones as they try to install iPhone Software 2.0.

Whether you are trying to activate an iPhone 3G, or simply attempting to upgrade your existing model after waiting for months for the iPhone update software goodness (and how many of you have already purchased iPhone apps you'd hoped to play with today?) O2's big spell of the day is like one big dose of fail after another.

What is happening is that people's existing iPhone's are being "bricked" (the term means to be made as useless as a brick) as users attempt to install the software update. This is because part of the updating process demands iTunes activate the phone.

Now it appears Apple's - or O2's – servers are unable to keep up with the demand for authorisations through iTunes, leaving many iPhone owners - new and old - facing a bricked, dead and erased mobile device.

Those who have been able to contact tech support are being asked to remain patient, with O2 saying it has been overwhelmed and the Apple/O2 combo are unable to keep up with the demand on the iTunes Store. "Engineers are looking into it," apparently.

The result is an iPhone stuck in limbo. It’s got the new software on board, but without being activated by Apple’s servers, it’ll only make emergency calls.

Error messages generated by the frustrating turn of events seem to differ, illustrated is one such fault report.

I have heard close to a dozen reports of this problem since returning to my office 20 minutes ago. I am also affected. The companies concerned are also aware of the problem, but with millions of iPhones being updated at the same time, it’s unlikely to be fixed any time soon.

Incidentally, these problems are not only plaguing UK users - AT&T is also suffering the iPhone activation curse...