The iPhone works again. Calm returns to earth.

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UPDATE: 4:50.

The iPhone 3G launched Friday around the world -. and promptly ran into problems. But the technical issues appear to have been corrected. Old iPhones work again. New iPhones are being activated.

The blogosphere, as you might expect, covered the collective howling as if it were the Olympics. ‘Y2K wasn’t this much fun,’ said Good Morning Silicon Valley. iPocalypse Now, is how they described it at All Things Digital. Six million iBricks, noted Engadget.

Meanwhile, AT&T reports that most of its stores have sold out of the iPhone and people are still waiting with hope outside Apple stores in New York City, with security guards offering suggestions of how long the wait might be. Engadget does a run down of supply and demand around the world. Tampa still has the iPhone...at least at the time of this update.

UPDATED. 10:30.

Many people with old iPhones who tried to download the new software have run into serious problems. The download is taking a long time. Once downloaded, some say the phone then freezes, allowing just emergency calls. This comes on the heels of complaints that the phone’s new e-mail service MobileMe wasn’t working after Apple took down its old service .Mac.

Inside the stores selling new iPhones - people are being told to activate them at home, a reversal of what Apple said would happen in the store. An AT&T spokeswoman attributed the change to problems accessing Apple’s iTunes store to get the new software. ‘Apple is working on it feverishly,’ she said.

In the meantime, people who have made their iPhones the center of their universe are facing their existential crisis with a total freak out on Apple’s blog. Some bloggers advise people not to update or to look for a back door way to update the software.

The iPhone began selling around the world today, with crowds lining up outside Apple stores and cellular company stores. They greeted the opening of store doors with cheers.

The iPhone 3G is the second version of Apple’s gadget, which first went on sale in June 2007. Apple says that more than 6 million phones had been sold by early June and it hopes to sell 10 million by the end of this year. The new one runs on a faster network and, in the United States, costs $200 less, although the price drop is made up in higher monthly service charges to Apple’s exclusive U.S. partner, AT&T.

The phone is going on sale in 21 countries, many for the first time. Its launch comes as Apple opens up an online store for games and programs for the iPhone.

Getting people through the stores will be today’s challenge. Already, there have been glitches. A spokesman for AT&T told the Associated Press that a problem with Apple’s iTunes software impeded activating the phone inside stores, as had been expected.

In San Francisco, a cheer erupted when the doors opened at the Apple store on Union Square, where people had spent the night in tents and handed out doughnuts to police officers. A shorter line of people waited outside the AT&T store a few blocks away.

Nicholas Panzer, 26, a waiter, knocked off work at 1:30 a.m. and arrived at the Apple store at 6 a.m. to be the 151st person in line. The reason to come out early: ‘I’m guaranteed to get one today.’ Already an iPhone owner, he said he had to buy the new one.

Standing next to him was Scot Peterson, a designer, who held up a smashed iPhone. ‘Time to get a new one,’ he said.

Spencer Duclos, 16, a tourist from Reno, said he just had to have the phone. Standing in line with his father, he showed his Samsung phone and then put it away. The iPhone is ‘the end all and be all of all phones. You don’t need anything else.’

-- Michelle Quinn

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