I had the same problem last week and it wasn't to do with FW or anything like that - it was because the iPhone was sensing the headphones plugged in for some reason. Try making a call using the headphones - if people can hear you, then there's your answer. I just repeatedly did what you already mentioned and plugged/unplugged the headphones, blew into the socket a few times.

Just to clarify:

Downgrade 1.1.2 worked fine. Quality is suberb again... does any1 know what the exact problem is?

Can i reupgrade?
Would a softwareunlock help?

Would love to have 1.1.3 back

Hardware used: 1.1.2 OTB, Jailbroken with Java Jailbreak, StealthSIM