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well you need to have a paid for developer account firstly and have your UDID registered under your dev account then can you update.
 
Have you paid the $99 developer fee? Merely signing up and downloading the SDK doesnt give you 3.0 access, you have to pay Apple too.
 
You log into the developer portal, download the software, and then option click the restore button in iTunes. This allows you to point to the 3.0 b5 install package you just downloaded.

You also need a certificate and have the UDID registered to activate the phone.
 
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