no service after iOS 5.1 update iPhone

Okay so it looks like i'm hit too.

I bought a referb(haha)  3GS(16gb newer model) from AT&T and it came with IOS 5.0 pre-installed, everything worked fine updated to 5.0.1 as soon as I got it activated.

I then upgraded my phone to a 4 and decided to give my 3GS to my brother (who also has a 3GS, just an 8gb version), before I was going to do that, I decided to restore and update, after resetting all settings and updating to 5.1, I put in his SIM into the phone but itunes says that there is no SIM inserted into the phone and I'm not able to activate it.  Same for wifi activation, (says server is busy).  I've tried another AT&T SIM from another iphone 3GS and the same thing, No service, no SIM, busy server.  So I thought It'd try and restore the iphone, I put it into DFU mode, hooked it up to itunes, hit restore and it gives me an error 3194. 

Oddly enough I don't get this error on my laptop if I restore from there.  Either way, my 3GS is no longer working after the 5.1 update.  I was told by my friend who works at the apple store that 5.1 does break a few iphones for one of two reasons, but he didn't think the problem with my phone were either of them.

Uhh.. Any thoughts on this?

Also, sorry if this was posted on the wrong board.