If you unlocked your phone using iPhoneSimFree’s commercial unlock, stop reading. This post because it won’t help you.
As I mentioned, I had held out on upgrading my iPhone to the 1.1.1 firmware. Early this week, all the necessary components came together to allow an unlocked iPhone 1.0.2 running third-party applications to be upgraded to firmware 1.1.1. The process is a little time consuming but it works. Not all of the third-party apps I was running have been upgraded to work on firmware 1.1.1 but most of them work quite well. A suggestion, before starting any of the upgrade processes, remove ALL of your third-party apps except the Term-vt100 and OpenSSH apps (you will want this as a backup for the upgrade process in case you can’t ssh into your iPhone). You may not be able to remove the BSD Subsystem because, Term-vt100 and OpenSSH need it. You will have to upgrade these manually after the upgrade to 1.1.1 because the Install App packages haven’t been properly updated.
FYI, after upgrading, I have less than 30MB free when using the Installer app. Under 1.0.2 I had around 90MB free. I’m not sure if this is dead space because I didn’t uninstall apps prior to the upgrade or the available space shrunk because Apple used it.