I pwned my wife iphone1,1 with 3.1.2.
On reload, cydia failed. I tried this several times before I realized the problem.
In pwnage I had selected several cydia apps to be installed within the .ipsw package.
One of the various cydia packages must have corrupted the cydia files.

So I would advise to install any cydia apps manually after loading a basic ipsw file with only the default cydia package.