After restoring, iPhone 2G says "Connect to itunes"

still rocking first gen iphone!
On syncs it would say, back ups failed. Regardless, it would still allow me to sync. So i decided to restore to see if i can fix the backup errors. ITunes restored the device to iOS 3.1.3.
ITunes sees it and looks like it is syncing but then i get 2 errors, unable to backup, unable to sync. Phone just says "Connect to iTunes".
is it toast?

Did you try to remove the latest backup from the list in iTunes/Settings/Devices if you're on a Mac or iTunes/Edit/Preferences/Devices in Windows?
Make sure to copy the backup folder to a safe place before you start, it is located here:
Mac: ~/Library/Application Support/MobileSync/Backup/
Windows XP: \Documents and Settings\(username)\Application Data\Apple Computer\MobileSync\Backup\
Windows Vista and Windows 7: \Users\(username)\AppData\Roaming\Apple Computer\MobileSync\Backup\

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