I was trying to upgrade my iPhone 4 to iOS 4.1. Since it’s an unlocked iPhone, upgrade should not be an issue, but my iPhone started giving error 1004 and error 21. Initially I was trying to update using Windows system but after this issue, I moved to Mac.
While trying to update my iPhone, I started getting Error 1603 which is unusual error. I tried lots of time to restore and fix this issue (As suggested by many other forum) but it didn’t helped.
Luckily after some hit and trial I was able to fix this issue by removing my sim card and sim tray and updating it again. Voila! within minutes my iPhone 4 is updated to iOS 4.1.
So if you are also stuck in the same situation like me, I would suggest remove your sim tray and try updating your iPhone.
Do let us know if this doesn’t helped you in your case.