Just got my 3rd iPhone and downloaded ZiPhone which worked fine but now when I go to download BSD Subsystem, it just says "Error Package download failed!"

I'm not sure what to do. The firmware at the moment on the iPhone is 1.1.2 and BSD Subsystem is 2.0 so do I need to update to the newest firmware to download BSD Subsystem?

have you installed Community Sources from Sources in Installer?

If not, give it a try. Also you don't need the newest firmware if 1.1.2 works for you.

yep community sources is in there. I'm going to upgrade to 1.1.4 and then see if it'll work

if you have the latest community sources installed and are still getting the "Error Package download failed!", the installer may have a package in the queue. Clear your queue.