Apple's iPhone 3G activation/sync fiasco (updated 5x)

Atlantic City -- I'm not sure if it's just a server load issue because of all the east coast Apple and AT&T stores opening, but here at the Apple Store at The Pier customers are being told that their phones can't be activated and to take them home to activate. Rob and I popped upstairs to the coffee bar (thanks to free coupons from Apple) and connected to the free Wi-Fi network only to have the same problem.

When connecting the iPhone 3G to iTunes, the barber pole spins for a minute then throws a -9838 error (pictured). Anyone else having activation issues?

Update: Apple has put up a new error page in iTunes, so it appears that the activation problems are on Apple's end of things. To make matters worse, upgraders are left with lobotomized 2G iPhones that show a "No Service" message. Buying a "new" iPhone today effectively leaves you with two dead phones (Techmeme).

Update 2 (11:20 ET): After watching the barber pole spin in iTunes for about 30 minutes I finally got a funky -4 error (above) but I looked at the iPhone screen and I'm activated baby! Apple needs to work on their error messages a little, but the takeaway is that the activation servers appear to be over capacity and it's best to just hang tough and wait. Patience, jedi, Patience.

Update 3 (11:30 ET): Although my new iPhone is activated and can make and receive calls, I can't sync it to iTunes to get my old iPhone data (address book, iCal, email, apps, etc.). I'm still getting the barber pole for about 10 minutes, then the -4 error (above). While my new iPhone is technically functional, it's still kinda hobbled. Steve release the hounds, I need my address book.

Update 4 (12:00 ET): I spoke with AT&T Mobility Executive Director of Media relations, Mark Siegel and he mentioned that the activation issue is on Apple's end and that "Apple is working to resolve the issue as fast as they can." AT&T meanwhile is also telling their iPhone customers to take their iPhones home unactivated and "try it again later."

Update 5 (12:50 ET): Still getting the infamous -4 error in iTunes (although my iPhone is activated.) I don't understand why I can't restore my iPhone data from a backup. I don't need to access to iTunes store to restore but it tries the store immediately upon plugging in the iPhone. Canceling (by clicking on the little "x") just leaves me with a blank iTunes window. I'd love to know of a way to get around the phoning home part. Thoughts?