Hacking your iPhone to add additional applications opens up a whole new world of software options, but there may come a time when you want to restore your nifty handheld back to its factory fresh condition. If you only installed additional applications, it’s a pretty easy procedure. If you unlocked your iPhone so you can use it with any cell carrier, things get a little tricky.

Restoring from Software-only Hacks
If you have used AppTapp or any other method to "jailbreak" your iPhone and add additional applications, restoring is a straight forward process.

• Launch iTunes and connect your iPhone to your computer.
• Make sure your iPhone is selected in the media list, and then click the Summary tab.
• Click the Restore button.

Use iTunes to restore your iPhone to factory settings.

• You should see a dialog asking you to confirm that you really do want to restore your iPhone’s original software. All of your personal settings and data will be deleted when you do. Go ahead and click the Restore button.

iTunes confirms that you want to restore your iPhone software.

Restoring an Unlocked iPhone
Restoring an unlocked iPhone so that it only works with AT&T is a more involved process, and so far it seems to be more of a black science than a simple step-by-step procedure. Some iPhone owners are even reporting that they can’t seem to get their iPhone back to a pre-unlocked state.

With that grim warning in mind, Erica Sudan has been doing some remarkable work with iPhone code and has put together a procedure that seems to be working for at least some people. Be sure to check her article at TUAW for the latest on re-locking before diving in.

According to Ms. Sudan’s work so far, this is what is in store for you:

• (Take out your SIM from your iPhone.)--Still checking on this step.
• Download the 1.0.2 firmware to your computer and unzip it. It uses a .ipsw extension but your unzip program should still work. Change the extension if you have to.
• Extract the ramdisk as such: dd if=009-7698-4.dmg of=ramdisk.dmg bs=512 skip=4 conv=sync
• Mount the extracted ramdisk.
• From the ramdisk, copy /usr/local/bin/bbupdater, /usr/local/standalone/firmware/ICE03.14.08_G.eep, and /usr/local/standalone/firmware/ICE03.14.08_G.fls to your iPhone. Place these into a folder on the OS partition (such as /bbupdate) and not into a folder on /var/root. The /var/root partition is set noexec and you cannot run programs from there.
• Disable com.apple.CommCenter.plist -- either using UIctl or launchctl: launchctl unload /System/Library/LaunchDaemons/com.apple.CommCenter.plist
• On the iPhone, navigate to the folder where you stored bbupdater and the eep and fls files.
• Run bbupdater as such: ./bbupdater -f *.fls -e *.eep
• Reload comm center: launchctl load /System/Library/LaunchDaemons/com.apple.CommCenter.plist
• Reactivate with your favorite AT&T SIM. I personally like using iASign.

Restoring your iPhone to the state it originally shipped is a good idea if you need to take it in for warranty work, and it is an easy way to troubleshoot an iPhone that isn’t behaving correctly. Since Apple has warned iPhone users that unlocking their phone to free it from AT&T could turn it into a non functioning paper weight after firmware updates, restoring could save you from losing both your investment and a working iPhone.