IPhone – Downgrading from 4.2.1 to 3.1.3

I've had this happen once before. Is your phone in an "endless loop" of reboots? If so, my solution was to put the phone in DFU mode and restore it and just try the jailbreak over again. Sometimes things get loopy and it just doesn't work correctly. Give it another shot.

How to Put an iPhone Into DFU Mode

No, there is no way to exchange backups for each major versions.

but you can give that a try, first you need to downgrade the firmware, and for the moment you can't downgrade from 4.x to 3.x as it already updated the baseband and there is nothing you can do now unless using hacker tricks that you need to find in specialized forums.

Then after update the device with the firmware, you just chose "restore backup" on your first connection to iTunes and pass the activation (if an iPhone)

Remember one BIG thing:

iPhone 3G runs iOS 4.0 really slow, but iOS 4.1 is sooo much faster! you should upgrade! I did and I was impressed with the speed, though now wife has it as I bought the 4th version of the iPhone.