Yeah I can back that one up - 3 out of 4 of my iPhone using friends don't understand that the phone has a OS that needs to be updated and don't remember having attached the phone to a computer with iTunes.
3.2.x was never released for iPhone. It was an iPad-only release. That said, I get what you're saying.
Probably meant 3.1.2, which is what I'm still running on my 3G, because the jump up to 4.0 was so painfully slow.