2.0 instability is a pretty universal issue these days. I haven't played with 2.1, but our tipsters suggest that it's not a great improvement on 2.0. Still, there are ways to keep your iPhone usable without downgrading back to 1.1.4.
First, limit your applications. iPhone instability seems to rise as the number of onboard apps increases. Some users find that they needed to de-install all their apps and re-install them to bring the iPhone back to a harmonious equilibrium. Check out the discussion threads over at Apple for further information.
Second, reboot. A good fresh reboot does wonders for your iPhone's stability, allowing the OS to restart cleanly. A reboot a day may keep that unwanted white Apple away!
Thirdly, consider performing a complete restore if your iPhone seems particularly prone to crashes. After restoring, decline all existing backups. Instead, create a new iPhone identity. This provides you with the cleanest possible installation. Unfortunately, you then have to start re-syncing all your contacts, bookmarks, media, etc. and re-teaching your typing autocompletion choices, but you'll have built the best-possible starting point to work from.
Love from Auntie TUAW!