UPDATE: THIS METHOD DOESN'T MAKE INSTALLER 3.X WORKING ON 2.0 FIRMWARE, YOU MUST WAIT FOR THE 4.0 INSTALLER RELEASE

I found a pretty simple but really efficient way to solve Installer 3.1 issues.

NOOB PROOF METHOD (OS X ONLY)

1- Backup/rename your Installer sources folder (/var/mobile/Library/Installer) with SSH, Term-VT100 or Mobile Finder.
If you don't want/care to backup, you'll have to add your sources again and reinstall your apps because the Installed apps list of Installer will be empty and you won't be able to see updated apps.

2- Download the iLiberty+ 1.51 for OS X (previous versions are not compatible with the new payload format).
3- Download the Installer3FIX.lby and save it on your desktop.
4- Open iLiberty and check the "Select a custom payload manually" option.
5- Click Browse and load the Installer3FIX.lby.
6- Click Free my iPhone/iPod Touch !
7- Update you Installer to 3.11 and restore your Installer sources folder.
8- Enjoy your error-free Installer.app




SSH/TERMINAL METHOD

Requirements:

- SSH Client: Putty for Windows or Terminal for OS X.
(You can also use TermVT-100 if it is already installed in your phone.

- Your Firmware must be 1.1.3 or 1.1.4.
- You must have or need to install BSD Subsystem.

Restart your phone and from a computer, use SSH to connect to your phone and type this:

Quit SSH and start Installer from its icon on Springboard.
The Permissions and "Package download failed" errors are gone.

If after doing this method you still have the "Package download failed" error while installing apps (but not with all of them), they are in fact caused by down repositories, so you might try again later

You have a typo in the first command, should be "Caches" instead of "Cache"

Thanks, corrected

Doesn't work for the insufficient permisson thing...

You have probably moved the Applications folder in the mobile folder when it should be in root folder.

No, I just moved the ringtones..

But the temp folder ist located in /var/root...

But even when I run your commands with root instead of mobile it doesn't help.

Installer doesn't use root, it uses mobile folder to store the sources plists, the Cache folder and the Temp packages.

The commands i give in this thread will create the files and path with the correct permissions.

You should check that Installer.app itself has the right ownership and permissions (root:wheel and 4755).

The Installer.app has the right ownership + permissions.

I noticed, that whe I use your commands with root and mobile and let the installer refresh then close ssh then none of the folders exist. /Cashes/Installer or Installer/temp both don't exist, not under root and not under mobile.

When I start the Installer from the springboard afterwards it says the permissions (mobile:root) thing. After closing it, there's the caches and temp folder but under /var/root!!

I flawlessly used this method several times on a fresh 1.1.4 restore and Jailbreak (PwnageTool).

If Installer store/save its files in root instead of mobile it is because of ownership problem.
How in details do you set/modify the ownership and permissions ?

I tried with chown and with cyberduck. It shows root:wheel 755 when I use: Is- la