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The iPhone Dev Team has posted a list of instructions on who should use what after upgrading to the iPhone OS 3.1. All in all, it breaks down to 8 rules, the first and most important being:
1. If you are using a 3G iPhone with ultrasn0w and rely on ultrasn0w to obtain cellular service, then you should only upgrade to 3.1 with a PwnageTool created .ipsw. - Stay away from Apple’s direct updates as described here and here please get up to speed on the whole subject by reading the information contained in these posts.