finally, after holidays, I DID do the update.
itunes refused to install it (more specifically, installed it, then verified it, then exited with "unexpected error occurred (10)" and left the phone in reboot loop.
An update to latest itunes helped, if only I had listened to you fully :-]

ActivateMMS2G was a bit trickier as iphone forgot the settings, installing an ipcc file through help.benm.at finally did it.
thanks for the support!!! love you guys!

Have iPhone 2G currently on OS 2.2.1 (which I installed with quickpwn, back then).
Have WinXP with itunes 8.1.1.10
Want firmware 3.0.1 plus cydia, need phone to be unlocked.
How should I proceed?

I'm asking because somewhere it read that redsn0w needs the 3.0.0 firmware, not 3.0.1 - can I upgrade from my version straight to 3.0.1? is the itunes version OK? and can I install the latest itunes after I updated the phone?
should I expect any problems?

Sorry if this has been asked before - better be safe than sorry :-)

PLUS want ActivateMMS2G but as I understood, I can do that from cydia after the magic has been done.