Cannot update single apps from App Store only "Update All" on 2G 3.1.3/Backgrounder
I have an iPhone 2G running 3.1.3 jailbroken via redsn0w and have virtually no problems with it.
But for some reason App Store when I hit upgrade for an App, it just sits there and does nothing, but if I click "Update All" suddenly everything works.
Also, some programs that I have running with "Backgrounder" sometimes die, but not sure if it's just the iPhone running out of memory and it has to kill stuff or what.
I think the App Store thing is just a bug in 3.x--I remember having the same issues on a jailbroken 3.2 iPad that went away with the 4.2.1 update... as long as you can still update the apps, I personally wouldn't worry too much.
As for the Backgrounder thing, your hypothesis is correct; the iPhone 2G only has 128 MiB of RAM, and of this, ~32 MiB is wired and another 64 or so will be active for system-critical or user-necessary processes.
Trying to run more than one user-initiated app on the system will result in the little RAM left drying up and memory being released from where it can--in this case, your other background application will likely be "lowest priority" and will be stopped first.