IPhone 3G -- 4 upgrade; apps won't update/install - verification required?

I upgraded my 3G to a 4. I backed up the 3G, went to the AT&T store, they switched over to the 4. I plugged the 4 back into my PC and restored the 3G backup. I had to re-enter some passwords but otherwise everything was restored.
However, I cannot install or update applications. When I try to do this, it says "Verification Required" and I have to hit "Continue." Then it says "Sign In Required" and I hit continue and enter my iTunes MS password. Then it pops up a credit card screen and it wants my 3-digit ID. I enter that and it Done and it pops up an "Address Verification" screen to pick my county.
At this point it gets stuck in a loop and no matter how many times I pick my county, it clears my entry and goes back to that screen.
I tried logging out and back in on the phone, no luck.
I tried updating from Settings, no luck.
I tried logging out and back in from iTunes, which let me enter all of this information, but the phone still keeps asking for it.
I have restarted the computers.
I have restarted the phone.
Unlike the other thread about this, I'm not using multiple accounts. This is very frustrating and irritating.

i can verify that this abject failure occurs on a 3G iPhone running iOS 4 as well.
do NOT NOT NOT "upgrade" to iOS 4 unless you absolutely must.
i get no requests for verification or agreement to boilerplate.
i get no password prompts.
i have no restrictions in iTunes or on the phone to prevent apps installing.
i have restarted phone and computer repeatedly.
and yet the imbecilic software simply grays out the Apps tab in iTunes/Devices/my phone. it's not even as if it lost connection to the phone - if i rearrange apps on my phone itself, when i reconnect to iTunes the grayed-out App tab reflects the changes. music syncs fine. it just won't let me
sync apps.
oh, and iOS 4 brought back the infernal 2-second delay every time you touch the screen in iPod mode. really effing annoying whenever you scroll in cover flow, or actually just all the time.
it makes me think Apple might actually have become evil enough to sabotage customers' old hardware in order to drive new iPhone and iPad sales. the less-cynical view might be that they're just really busy fixing antenna issues, but you can no longer be sure.

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