Apple's SDK documentation warns:
“Once you install the pre-release iPhone OS on your device, such device may only be used for development and testing purposes until the final (GM) version of the iPhone OS is released. In addition, you will need to install new versions of the software from time to time throughout the beta period. Failure to install the most current version will, after a period of time, put your device in a deactivated state.”
It's also been found that the beta fimrware updates the device's baseband, making the update permanent and unable to be downgraded from. So, once you dedicate an iPhone to development, it will stay that way until the next public firmware update.
The 1.2 beta also disables the devices raido, meaning it can no longer make phone calls.
Allegedly there are patches floating around the hacking community for the beta, but so far none have been released.