iPhone 2G stuck in recovery loop? Can I backup before restore?

Title of thread says it all, received a phone call from my boss earlier, he has a original iPhone 3G already jail broken on a very outdated software. He never has plugged into iTunes to transfer anything and consequently not made a backup ever. I told him I can get it out of recovery loop and update and re-break but not sure if I can get his contacts back. Any help would be greatly appreciated. I read somewhere that with some iRecovery software I may be able to get into the phone and get some info back. Any truth in this ?

 

Update

Tried iRecovery and it went through all command lines but kept giving error message reboot failed . Have had to restore it but won't go pass the plug into iTunes activate phone screen as don't have sim inserted :/

 

Restored in iTunes with custom 4.2.1 restore IPSW as apple servers where telling me 7 hours for download. Have lost the unlock on the device but won't let me JB with greenpois0n cannot get the phone in DFU mode . Can get in recovery no probs but DFU = impossible . (BTW not a complete n00b, have been doing this since I had my original 3GS white at launch)