I'm in an endless restore loop and I can't get out!

I cannot get out of the restore loop. Let me explain: I had problems with my first 3G unit and the Apple store gave me a new one. I was instructed to go home and load the 2.0.2 software update, which I did.
Then iTunes asked me to restore my iPhone from the last synced back up which I made before I returned my original phone. When I did, it made another back up under a different name. It would not let me move past the restore step and every time I attempt to manage my iPhone (add songs, apps, etc) it asks me to restore.
I think the iPhone is okay. I suspect that iTunes is confused because it thinks my phone is a different phone every time I connect. How can I eliminate all the back ups from iTunes?

I found a simple fix to this that somone posted on MacRumors.
When you get stuck in a restore loop and your always presented with the "setup as new phone or restore from backup screen" even though you have already restored it just hit the continue button and immediately pull your iPhone out of the dock or USB.
You must be quick. do it as soon as the screen changes.
Then when you plug it back in iTunes gets tricked into thinking it's just been restored and it works fine.
Obviously this only works if your phone really did restore and the actual phone is fine just itunes is messed up.

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