It's being reported that O2's in-house system has crashed, leaving stores having to process iPhone 3G customers manually, leading to long delays.
The reports coming in - many from Pocket-lint readers - state that as the stores are without computer or payment systems, the quoted 20 minute processing time - for credit checks and contract paperwork - is lasting much longer.
It seems those who have managed to make it out of a store with an iPhone 3G have done so without the device being activated, and have been told by O2 that this will take place when the systems go back up later today.
Mobile News International quotes on anonymous O2 staffer as saying: "It has been chaos; of all the days it could happen, today is the worst".
Earlier this week the company came under fire after their online store fell over under the demand of thousands wanting to place pre-orders for the new phone.
O2 has apparently denied the system failure - we are waiting to hear direct from the O2 press office and will update this story with more. In the mean time, please continue to post your comments about your experiences below.