• The update will work ok in iPhones with no modification.
• The update will work ok in iPhones with Installer.app (although it gets wiped out; the apps seem to remain in the iPhone, but they won't appear in your screen).
• The update will work ok in unlocked iPhones, but it will return your iPhone to the activation screen. From there, no activation is possible. The iPhone doesn't get bricked but —as expected— so if you want to keep using it, don't update your iPhone.
• This has been confirmed with both anySIM and iPhone Sim Free.
• "Third-party applications won't work after the update" (confirmed by Dev Team.)
• "Firmware 1.1.1. relocks iPhone properly" (confirmed by Dev Team.)
• Unlocked iPhones updated to 1.1.1 will work with legit AT&T cards (confirmed by Natetrue) (read after the jump for an explanation of why this is wrong)
• iPhone Sim Free claims that their paid SIM unlocking solution doesn't hang your iPhone at the activation stage: they say you can activate using an valid contract, AT&T SIM and iTunes, but it will still be locked afterwards anyway. (We haven't tested this yet)

http://gizmodo.com/gadgets/apple/iphone-firmware-111-out-and-tested-brea...