According to the blogs and media reports, Apple’s servers were overflowed by the customers trying to activate their new 3G iPhone and by those who tried to upgrade their older iPhones to the latest software.

In fact, last year, when the initial iPhone was launched the customers have reported similar activation problems and Apple tried to avoid running into same issues this time by advising the clients to activate their iPhones in-store.

However, according to various reports, salespeople instructed customers Friday to go home, connect the phone to a personal computer and download new software to activate it.

Unfortunately, it seems like the demand was much bigger than anticipated and reports about activation problems were pouring in on Friday.

San Francisco Chronicle quoted an AT&T spokesman, John Britton, who said that  Apple's iTunes software crashed globally for several hours due to the high volume of traffic.

However, it seems like the problem was cleared in the afternoon. Britton explained that unlike last year, the 3G iPhone was launched in 22 countries and the worldwide demand was unprecedented.

The iPhone owners who tried to update their phones through iTunes have complaining about the error messages generated because iTunes was unable to authenticate the devices.

Also, as Time reported, the calls for technical support were referred by AT&T to Apple. So far, Apple and AT&T has declined to comment on the issues, but The New York Times said that Apple’s executives acknowledged the missteps.

It seems like the combination of the software updates and the activation process was too much to handle for Apple’s servers.

The new iPhone combines 3G networking, which is twice as fast as built-in GPS for expanded location-based mobile services, iPhone 2.0 software and of course, hundreds of third party applications to turn the mobile phone into a pocket PC.

Customers will be able to take full advantage of the Multi-Touch interface, accelerated 3D graphics, built-in accelerometer and location based technology for an unprecedented experience, as Apple promised.

The iPhone 3G becomes available in 21 countries - Australia, Austria, Belgium, Canada, Denmark, Finland, Germany, Hong Kong, Ireland, Italy, Japan, Mexico, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, UK and the US – as of July 11, for the suggested retail price of $199 (8GB model) or $299 (16GB model). France will have to wait until July 17 to get its hands on the iPhone 3G.

But the wonder-phone is not coming alone, dragging 500 downloadable applications with it, under the name App Store. The applications will be available wirelessly and can be used immediately after being downloaded.

Some of the apps are free, while others will be charged to the user’s iTunes account. The 500 native applications cover a wide variety of categories, from games, business and travel, to news, sports and health.

The App Store was launched on Thursday, one day before the iPhone 3G, and is also available in iTunes running on Mac or PC, which syncs applications to the iPhone or iPod tough using a USB cable, Apple explained.