Yeah, I heard that activation is completely broken and all the Apple servers are down.
Way to go, Apple.
Maybe now they'll go back to in-home activation after this mess.
Edit: Also, if you have an original iPhone with the v1.x software,
don't upgrade it to version 2.0 right now. It will leave it as a brick since the phone needs to contact iTunes in order to complete activation. Once the servers come up again it should be fine, but until then hold off.