I had Cydia dissapear and I only need Jailbreak, I'm not interested in Unlocking

I'm at Version 2.2.1 5H11 and firmware 02.30.03 originally updated at Itunes 8.1.x

My Carrier is at ATT 3.1 and I now have Itunes 8.2 23 and its asking to be upgraded to 9.0.1

After seeing all the posts on Redsnow back in June I opted not to do anything until everything settled.

Should I:
Upgrade to 3.0 or 3.1 and use Redsnow keeping Itunes where its at or taking it to 9.0.1
or
Downgrade to itunes 8.1 and qwikpwn 2.2.5-2 again as the Itunes I have does not recognize the iphone
or
sit back and wait further for another update.
PD-Im a Apple user
Please send any links that demonstrate how to walk me thru the process.

Thanks

firmware 3.0 stock + redsn0w + ultrasn0w is OK.

NO NO to firmware 3.1 stock.
Do not touch firmware 3.1 stock.

ONLY use custom 3.1 fw via pwnagetool. If you don't know what it is, don't even think about 3.1

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If I understood correctly,

I should upgrade to version 3.0 or 3.0.1 both having firmware 4.26.08.

In doing so, ITunes 8.2 23 should recognize the Iphone 3G and I can then install redsnow and follow the steps to jailbreak and get cydia back up.
If I do not want to unlock I should not bother with ultrasn0w.

Why would custom 3.1 pwnagetool fw be better, and will I have the same result with either solution?

Am I way off base here?

You are 100% correct I would suggest upgrading only to 3.0.1 until there is a way to jailbreak 3.1.2.

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iPhone 3GS 32GB factory unlocked (3.1; Pwnagetool, Cydia, OpenSSH)
iPhone 8GB (3.1.2; Pwnagetool, Cydia, OpenSSH)

Thanks to both of you,

I'll try it out tomorrow, is there a good reliable tutorial on this forum or around you tube?