1) If you updated from 1.02 that was unlocked with anysim 1.02 or iUnlock, you will have a "bricked" iphone.
2) Press the italicized "i" when youre on the screen with the "Please Activate your iPhone" or "Incorrect" sim.
3) Compare the listed IMEI # with your IMEI # on the back, if its incorrect and starts with 0049, you have a bricked iPhone, for now.
4) Read Bigboss\Xmod's Guide to downgrade back to 1.02 and fix your problems.
5) After downgrading and virginizing, you can safely update back to 1.1.1, if you wish, and then perform the jailbreak.