Saurik recently tweeted that he has “finished upgrading the in-Cydia SHSH on file firmware display” and “it will now show the full list of on file firmwares.” What does this mean? Apple has made it so you have to connect to their servers via iTunes when you restore your iPhone 3GS. This let’s them approve what version of firmware you are restoring too. Then, they make it so older firmwares won’t restore, which forces you to upgrade.
Saurik has built his own authentication server that you can point iTunes to and then restore to any firmware that you’ve had installed and jailbroken since 3.0. You must approve Cydia to connect to Sauriks servers to store the SHSH authentication file. Previously, Cydia would only show that there was an SHSH file stored for firmware 3.0, but now it will show others like 3.1 and 3.1.2.
This doesn’t affect iPhone 3Gs or the 1st Gen iPhone because only the iPhone 3GS has hardware encryption.