Apple's newest update for the iPhone, firmware version 1.1.1 has been released and includes a long list of feature additions, bug fixes, and security enhancements. As always, the new firmware can be installed on your iPhone via the iPhone "check for updates" button in iTunes.
As previously reported, Apple has made it quite clear that applying the update to a modified or "hacked" iPhone can cause permanent and irreparable harm to the device which will NOT be covered under and Apple warranty. if you have performed ANY type of unauthorized modifications to your iPhone (custom ringtones, jailbreaking, custom software, and especially unlocking), make sure to read on and/or research the new update before applying it.
Users who unlocked their iPhone via any of the many available methods (iPhoneSIMFree, iUnlock, AnySIM) should simply not install the update at this time. Hold tight and wait for more info to be revealed about the consequences of updating an unlocked phone and the proper method of applying an update.
If you have performed non-unlock related modifications, such as jailbreaking and the installation of 3rd party software, initial reports are that performing a restore of your iPhone before updating is safe. These are initial reports of course, so update at your own risk.
Of course, during the restore process you'll be erasing any third party software or other custom modifications you've made to your iPhone. In fact, you'll be erasing the phone and restoring it to it's factory software condition. Make sure to back up anything on the iPhone you'll miss before doing so.
Once you have updated, you'll have to wait for new versions of software like Installer.app, iFuntastic, or iBrickr before you can re-modify your iPhone under the new software. That said, should you have fallen in love with your mods - wait.
Please post any new information you discover about the update process here in the comments, or by sending us feedback, so that your knowledge can be shared with other iPhone users.
For a list of added features, enhancements and security updates included in the iPhone v1.1.1 firmware, head here.