Iphone 3g Hangs and stucks at activation Screen on update to OS 3.0

Hello Friends,
My Iphone 3g Hangs and stucks at activation Screen on update to OS 3.0.
I updated the phone to OS 3.0 last night and to my surpsrise after the OS Completely installs and restarts the phone,the phone then hangs and all i can see is a black screen when the phone is connected to PC.
As soon as i disconnect, it shows the Itunes-PC Connect image asking for activation.
Again if a connect back,it hangs and keeps on restarting ..over and over again.
i tried everything:
1) Re-Install Itunes 8.2
2) Re start OS
3) CHnage USB Cable
4) Change PC
5) Keep the phone connected for around 4 hours expecting some miracle to happen still no use.
** If i try to donwgrade back to 2.2.1 then it givess error to and not able to downgrade.
Now i have put myself in a situation wherein i had to switch to other phone.
The phone is just getting rust as there is no Support/Care center in India.
Please someone help me out.
Atleast let me know :
Is any hardware part involved in activation of phone?

Close iTunes and unplug iphone
Search web and download the 2.2.1 ipsw file.
Go to device manager on PC and delete the USB option for Apple under the hardware options.
Reboot PC
Plug in iphone and wait for dreaded connection picture
hold power button and home button until apple logo appears
continue to hold home button and release power button until connection picture appears again
Your PC should now find the iphone in recovery mode
Now open iTunes and it will prompt you to restore
Hold the shift button on the keyboard and click the restore button at the same time
This will allow you to browse for the correct ipsw file
select the 2.2.1 file that you downloaded
your iphone will now restore
Once completed, you will need to resync
Now you are back to square one but at least have a phone that works
Now make an appt at the Genius Bar and make them update it for you
Mine is scheduled for next week

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