We've heard four many accounts now from varying Apple store and AT&T locations that employees are having problems while trying to activate phones through iTunes. From Atlanta, one camper reports:

A "teal shirt" Apple representative came out to let us know they are having difficulty accessing accounts on the iTunes system. The line has been amazingly slow, but at least we are inside! In the last maybe 30 minutes only 5 people got into the store. Time to get comfy.

UPDATE: Here's the official word from AT&T:

We have had reports that customers attempting to download new iTunes 7.7 software to their new iPhone may get an error message saying "page not found." We have reported this issue to Apple. While Apple works to resolve this issue, we are asking customers to sync their newly activated phone later at home.

This does not look good. Apparently people at home can't even upgrade to firmware 2.0 and the problem is afflicting iTunes on an international scale. Here are a running tally of notifications we've received from the US:

"I was in the first group of 30 to get an iPhone 3G at the biggest AT&T Experience store in Houston, Texas. The staff couldn't get anyone's phones to activate, so they let us take them home.....where I still can't get it to activate - iTunes keeps timing out for activation, but not the iTunes store or anything else."

"Not sure if you have heard this, but I'm in an AT&T store in NJ and they can't activate the phones because iTunes is so slow. I've been waiting for 30 mins with the new iPhone attached to iTunes in the store and there is no end in sight... Have you heard about others having problems activating the phones? Sounded like other stores are having the same problem..."

"I bought an iPhone 3G and the AT&T activation isn't working. They are using iTunes to do it and there are network problems. Went home, and iTunes still won't activate. Seems to be an iTunes network issue."

"Apparently Apple completely underestimated the load on their servers for activation and ALL COMPUTERS in the Boston Apple store are stuck in the iPhone activation screen. No iTunes are able to connect to the central server, so no iPhones can be activated. "

Even the iTunes link on Apple is gone.

Full Story At Gizmodo