App Store: Account only valid in US iTunes Store (in US!)

Odd problem. All my apps from the app store are crashing at startup. I didn't do anything other than connect to a new wi-fi hotspot.
I tried shutting down the booting up again. No luck. Then I tried to delete an app and re-install to see if that helped. When I got to the app store, the content of the featured page for example was different. Then I noticed that the prices were in Euros (a c with two horizontal line through it). Of course, when I tried to re-download the free app with my US AppleID it failed. The error message:
"Your account is only valid for purchases in the US iTunes Store."
NO WAY! Had no idea. It's not my fault that it's not letting me browse the right store.
Any ideas? I've seen this three times on other people's phones.
(iPhone 3G 16GB, OS: 2.1 (5F136))

On your last sync, it appears you were not logged into the iTunes store on your computer....when you sync it gets your account info from your computer if you are logged into the iTunes store, thus knows where you are and what you can get.
Try logging into the iTunes store on your computer then resyncing.

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