You have to point your hosts file towards Apple server in order to update your baseband.
If you have tiny umbrella, go to advanced option and uncheck the set host
file to cydia upon exit , save it and close it.
Or go to your hosts file and delete the line that has gs.apple.com
Now you can either restore through itunes or download the 4.3.1 ipsw and shift + restore to it.
You should now be able to restore and update your baseband.
But ummmm... Padna. You have a rare gem there. Wait u til tonight when ultrasn0w will be updated to help you out. If you don't know what's best for you, hold on. There are a lot of people who will be willing to pay top dollar for an iPhone 4 with a 01.59.00 baseband. They're going nuta cause there is no unlock for anything onder than it. Try and see. But if you're not interested in either the money or the jailbreaking, go right ahead!
Dont go upgrading your baseband just because of that. Your phone is only displaying 1 bar even tho it can have anywhere from 0-5. It is a bug that occurs with your baseband and 4.3.1. There is a fix on the way tonight apparently.