I have an Iphone 3gs, running 4.0.1, jailbroken and unlocked on Tmobile.
Was working great till yesterday, I updated a couple Cydia apps and rebooted when prompted. During the bootit gets to the apple screen, then the jailbreak kicks in (I see the lines up top of the screen), then the gear just stops spinning and it eventually reboots itself and does the same thing.
Un fortunately I had not backed up my contacts so I would prefer not to restore and re-jailbreak etc unless thats my only option.
I remembered once Cydia just disappeared from my Iphone, while updating some apps and it messed up the phone completely. My only option was to restore. But its a good time now if you dont have SHSH saved as the latest firmware has a jailbreak. Also your computer is supposed to have an Iphone Backup were you should have your contacts.