With the iPhone 3.1 update killing the ability to tether on AT&T's network using the ipcc file hacks, I'm seriously considering Jailbreaking my phone. Before I do so, I'm trying to find out how a few things work. I've found plenty of tutorials on the initial jailbreaking of the phone, but most appear to be from fresh installs.

I've had my phone vanilla, with the exception of a few changes to the ipcc file, since November. I have tons of paid apps from the Apple store, and a good amount of music stored on my phone. What I'm trying to find out is:

1) Will jailbreaking with redsn0w will cause my phone to get wiped back to defaults, which will require me to reinstall any apps and music/videos (or even worse setup e-mail and other settings again)?
2) What special precautions or procedures I need to do when another new update comes out. Can I simply update to the latest apple update to temporarily remove jailbreaking until a new redsn0w comes out, do I have to wait for the new redsn0w to come out and update somehow using that, or do I have to do a full restore to an old, non-jailbroken backup and THEN update to the latest official and THEN jailbreak again?
3) Does jailbreaking keep me from using the current apple store and official apps?

I have no interest in unlocking to use on another carrier, so as far as I'm aware of I don't need to deal with hacktivation or unlocking or doing anything else that could mess with my baseband.

1) Will jailbreaking with redsn0w will cause my phone to get wiped back to defaults, which will require me to reinstall any apps and music/videos (or even worse setup e-mail and other settings again)?

yes - requires a shift click restore which wipes everything off. when you resync you MUST setup as new device, NEVER restore from backup - that causes unknown issues and or drains battery.

2) What special precautions or procedures I need to do when another new update comes out. Can I simply update to the latest apple update to temporarily remove jailbreaking until a new redsn0w comes out, do I have to wait for the new redsn0w to come out and update somehow using that, or do I have to do a full restore to an old, non-jailbroken backup and THEN update to the latest official and THEN jailbreak again?

No - when updates come out, you wait for dev team to release an updated redsnow for new firmware and only then do a shift click restore - never simply update, always do shift click restore.

3) Does jailbreaking keep me from using the current apple store and official apps?

Nope - paid apps are tied to your apple account and credit card you gave.