I have an Iphone 2G, it loses time when set on auto time. But when turned off and the time is set manually, it's fine. My wife has the exact same phone and hers is fine when set on auto.
Thanks for your response, I guess I neglected to say that I already tried that several times, it is the weirdest thing. I have two phones, they are indentical 2G's, Jailbroken with the pwned, firmware 3.1.2, and only one of them won't keep time on auto.
I thought that someone else might have had the same problem and knew of a fix.