If you create an Item as one type and decide that you want to switch it to a different type, you are able to do so by clicking on the Item type and then choosing a different type:
However, if you run in to an issue where you are unable to switch Item types, the most likely cause is that you have already tracked time or quantity to that Item, and are attempting to switch to an Item that does not track time or quantity:
For example, if you are switching from a Task, which tracks time, to a Material, which does not track time, and you have already tracked time on that Task, you will be unable to switch to the Material typpe until you have removed the time tracked.