My Iphone is currently jailbroken (using Jailbreakme) on IOS 4.0.1,
is there anyway I can upgrade this in Itunes and then jailbreak again. Also if i do will i loose all of my cydia apps etc?
If you don't require an unlock, you can just upgrade to 4.1 through itunes and then re-jailbreak with Limerain/greenpoison. Depending on how many cydia apps you've got you can find backup packages, but I find it better to just write down the installed packages and then reinstall those manually.
If you do require an unlock then don't do this method!