I have used that method with a 3Gs that needed an unlock. If you are ok now, I should probably wait a little bit before upgrading to 4.2.1

not clear mate. On the original post you mention 4.0 fw and now 3.1.3; please confirm this.
Anyway, if you are at baseband 5.14 and rely on an unlock, check ultra-recycle post. Basically, you need to restore to 4.1 and run redsn0w to JB. Select install ipad baseband to force redsn0w install the 6.15 baseband that can later be unlocked with ultrasn0w 1.2.

you can jailbreak with limera1n and unlock with ultrasn0w 1.2.

The non-unlockable basebands for 3Gs are 5.14 and 5.15, however you can restore to 4.1, run redsn0w to JB, and check the ipad Baseband, (6.15); afterwards unlock with ultrasn0w.

you need to read Ultra-recycle post.

what modem firmware do you have? That is the key information you need. Let me know so I can help you out.
I assume you need an unlock.

1.- there are different basebands that are not unlockable, so in some cases, you need to wait for an iOS upgrade, which coould lead to a new baseband that can be unlocked. iclarified has a godd summary on this matter.
2.- old bootrom are better because you don't depend on a tethered jailbreak (google the description)
Cheers.

try unplugging the usb cable and replugging again

Just a short one for anyone who updated an iPhone3G to 4.0 and the device is not working as smooth as it should.
You can rerun redsn0w without clicking Install Cydia, the rest and also not clicking (stupid) multitasking and walpaper.
The device will work better that way.

yes, that's how it works. Unless you might be depending on an unlock (if you plan to use it with another carrier) then maybe you should wait as musclenerd + planetbeing are working on it.

A humble opinion on Multitasking:

I assume this only applies for OS 4.0, meaning older FWs didn't force apps not to completely close after the centre button was pressed (thanks SBSettings for those cases!).

Anyway, what I would love, is that Apple would also have included a "force quit" button in each app so you can choose whether to definetly close the app or leaving it on the background, hence avoiding closing and then force quitting them by double-pressing the centre button, tapping and holding, etc... (this is a pain, to be honest).

Cheers.