After much contemplation, I decided to update my iPhone OS from version 3.1.3 to 4.0 Beta. The process seems to be pretty straightforward and I can easily restore my everything (except the firmware) using iTunes. Hopefully, there are not that many bugs in the firmware as it appears we cannot restore back to an earlier version.
This is the quote from the Apple Developer Website.
Once a pre-release version of iPhone OS is installed on the device you cannot restore the device to an earlier version of iPhone OS. The device may only be used for development and testing purposes until that version of iPhone OS is publicly released. Please DO NOT install the iPhone OS before registering device UDIDs, as installation on non-registered devices will render them inoperable.
Oh. Looks like it’s finished. Time to play with it. 🙂