I feel your pain hello51191. My iphone is doing the same thing. I've had it for about a month and it will not let me update to 2.1. It keeps telling me the same thing that the backup can't be saved. I've tried everything I can think of and read a lot of forums, but still have no answer. I've tried to restore, restart, remove apps, reinstall itunes and still nothing. I run windows xp, maybe thats the problem. Let me know if anyone has solved this problem.