you have activate it in the store, and if the contract is in your name, you must be there as well
From what it says on the o2 website, it says that you purchase the iPhone instore and select your tariff instore, but you then take the iPhone home and activate it through iTunes
Check
Here
Edit: Sorry i noticed that they have taken the writing away, so perhaps you active in-store now.
Also got this from the o2 site, perhaps they are in the middle of changing everything
Once you've got your new iPhone 3G, you'll need to connect to the latest version of iTunes to activate it.
Before activating
1. Check your voicemail
Before you activate your iPhone 3G, make sure you listen to your current voicemails. If you're an existing O2 customer, activation will delete your existing voicemails. If you're transferring an existing number from another network operator, existing voicemails will not be transferred.
2. Transfer your contacts, music and photos
Before you activate, migrate your existing mobile contacts into Outlook, Outlook Express on the PC, or Address Book or Entourage on the Mac.
More information on transferring your stuff
To activate your iPhone 3G
Insert the SIM card into your iPhone 3G. (Upgrading Pay Monthly and existing iPhone customers should use your existing SIM card.)
Download and install the latest version of iTunes.
Connect iPhone to a USB 2.0 port on your Mac or PC (not on the keyboard) using the included cable. iTunes opens automatically.
Follow the onscreen instructions in iTunes to activate iPhone 3G and sync your contacts, calendars, music, photos, podcasts, videos, email accounts, and web bookmarks.
If you're new to O2 and transferring your existing number, contact us with you PAC code if you've not done so already.