Trouble backing up phone for 2.0 update

I was able to successfully download and install 2.0 on my first generation iPhone with iTunes but I'm not able to do the same for my boyfriend's iPhone which also syncs with my computer.
Problems:
It says there was an error in backing up the iPhone and continuing without the backup would result in him losing the information on his phone (he has not synced contacts or calendars with my iTunes so that would be lost).
Whenever the phone is connected and syncing, it always restarts itself.
The first time we connected it, the color code bar on the bottom that shows the space left on your phone turned orange and iTunes no longer recognized the name of the iPhone, it just called it "iPhone" instead of, for example "Johnny's iPhone". He renamed it in iTunes and made a change in the playlist selection and hit "apply" and that seemed to fix this.
What I've tried:
Checked "allow iTunes to automatically sync when iPhone is connected".
Restarted the iPhone.
Restarted my computer.
Disabled blue tooth in the iPhone.
We know you should be able to update more than one first generation iPhone with the new iTunes so does anyone have any ideas as to what's wrong?
Message was edited by: frogpajamas42

Well, someone might have an idea if we knew what the "numerous different errors" are that are popping up. They mean something.

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