I recently tried to intall an app on my 2.1 iphone 3g but it said it couldn't be done because i need 2.2 firmware.

I googled for ages trying to find out if its worth upgrading and how to go about it.

Do i upgrade via itunes(i read some where i will lose 500mb of storage this way)
Or do i use quickpwn and do as i did originally jail break it?

Also is worth it as i'm on vodafone (uk) and its locked to O2. i'm currently using the rebel sim turbo which has firmware available for 2.2 with 2.28 baseband

Many thanks for any help, first iPhone and still getting my head round all the cracking