[Squirmy]

Replacing I- with OH- sounds to me like nucleophilic substitution?? Why is the name of the reaction you are proposing...Shouldn't electrophiles attack the electron-rich aromatic compounds...cause the carbocation made from benzene is highly unstable...correct me if i'm thinking wrong please.

You're right...aryl halides generally don't undergo nucleophilic substitution by Sn1 or Sn2 mechanisms. The copper is critical. See here if you're interested:

http://www.organic-chemistry.org/namedreactions/ullmann-reaction.shtm

I'd put money on hydrolysis of the diazonium salt. lutesium's way might work, but the reactions aren't usually taught at this level.

[uvcyclotron]

Don't you get a mixture of products and require harsh conditions by that route?

I think so..
Commercial Methods for Preparation of Phenols:

1. From Chlorobenzene (Dow's Process)
"you can obtain 4-chloro derivative of acetanilide using the FeCl3/Cl2 reagent"
Chlorobenzene is heated with 10% aqueous sodium hydroxide solution at about 623 K under 200 atmospheres and in the presence of copper salt acting as catalyst to form sodium phenoxide. The sodium salt when treated with dilute HCl, gives phenol.

2. From Cumene Hydroperoxide method
"The isopropyl group can be added at para position on acetanilide using Friedel-Crafts alkylation (anhyd.AlCl3/ 2-chloro propane)"

Air or oxygen is passed through a suspension of cumene in aqueous sodium carbonate solution in presence of cobalt or manganese naphthenate catalyst. The xidation product is cumene hydroperoxide.
The hydroperoxide is then decomposed by hot dilute sulphuric acid when phenol is formed with liberation of acetone. Acetone is removed from phenol by distillation.

3. From Benzene (Raschig's method)
Vapours of HCl are passed over benzene at 500 K in the presence of copper chloride and excess of air to form chlorobenzene. Steam is then passed through chlorobenzene at 800 K in the presence of silica as catalyst to give phenol.

[SVXX]

Well there's another way...and I think it's quite convenient and well within syllabus. It doesn't require diazotization or copper-catalysts.
The first step is to sulfonate acetanilide via an electrophilic aromatic substitution reaction to place the -SO₃H group on the 4th position.
The second step(used as a general way to prepare phenols) is to react the sodium salt of the sulfonate so formed with fused NaOH. It transforms the -SO₃Na group into an -ONa group, acidic hydrolysis of which yields -OH.

[orgopete]

I think as far as the original posters question is concerned, he needs to know this will be a two (or more) step process. That is, it won't be a single direct reaction.

I think most textbooks use the diazonium route (which is more than two steps). I think the other method that works well is a Bayer-Villiger type or the cumene route as suggested by uvcyclotron.

While I cannot say what a commercial route might be, I think acylation will give a greater para/ortho ratio and the B.V. reaction will work quite well in this case, but this route is less commonly referenced in textbooks.

[uvcyclotron]

The second step(used as a general way to prepare phenols) is to react the sodium salt of the sulfonate so formed with fused NaOH. It transforms the -SO₃Na group into an -ONa group, acidic hydrolysis of which yields -OH.

hey SVXX, this seems like a nice approach to the problem, but I am not sure about the mechanism of the above-mentioned transformation, could you explain it please?

If the reply would be too big and unfit for posting in this thread, then plz PM me.