Apple warned us not once, but twice, that a pending update would likely break unlocked iPhones and Third-Party functionality.

The news beat the horse until it was dead. There was simply no way an unlocked iPhone user would be caught off guard when the update came.
To be extra certain, the update installer even WARNS you yet again that it will likely break unlocked iPhones.

People still did it. Lots, and lots, and lots of people. After the update hit, I decided to hang out in #iphone (the iPhone dev teams IRC channel). At one point there were more than 650 people in the channel, a large, LARGE portion of which updated their iPhone and then..suprise...it locked up tight.

They were further surprised that they couldn't re-activate it, much less unlock it again.

Some peoples kids I tell you. Me? I didn't update. I am quite content with 1.0.2 for the time being. And if you are reading this, and you updated despite the warnings, all I can say is:

Idiot.