Apple recently released iPhone OS 2.0.1 to fix some troublesome bugs in the initial OS 2 release that have been negatively affecting the performance of many an iPhone. The new firmware has brought relief to countless users who were being nagged by persistent issues with lag and slow performance (i.e. keyboard lag). You can visit iPhoneFAQ's news article on the release for a full list of known bug fixes in iPhone OS 2.0.1.
Unfortunately, some users have been unable to apply the update due to an unspecified error during the upgrade process. Many iPhone owners have reported receiving an "Error -19" message, which causes iTunes to abandon the upgrade. Successive attempts to upgrade have worked properly for some users, but for most additional attempts offer the same result.
Several sources online indicate that iPhone owners facing this problem may be able to workaround the issue. Users who have received an "Error -19" message or a similar unspecified error may be able to successfully update by disabling automatic syncing. You can disable this setting via the checkbox in the iPhone "Summary" tab in iTunes. Once disabled, reconnect your iPhone and attempt the update again.