Download the three files for your device (Touch, 2, or 3g) from http://tinyurl.com/ltanvg
[update: the torrent to look for as an alternative is iPhone_OS_3.0_3G_GM_Golden_Master_7A341_[kenfun].4942338.TPB.torrent on somewhere like isohunt.]
Using The Unarchiver (http://tinyurl.com/2gndmu) open one of the Rar files. This will in turn create a master file.
Save the file iPhone1,2_3.0_7A341_Restore.ipsw
Connect and allow iTunes to sync and backup your iphone.
Now go to your iPhone in iTunes, press ALT (command) key and click your mouse on Update. The file browser window opens. Point it at the file you just saved. Sit back and wait for your phone to be updated to 3.0
On o2 10 minutes later you will get a text telling you MMS has been enabled. This means you are ready to send and receve photo messages (cost is 4x text).