I have a 8gb iphone that came with 1.1.2 and I have jailbreak and unlocked and move on to 1.1.3 by iClarified software.
For me I am happy, but I understand your thoughts about updating.
Because I bricked mines about 3 times, but figured how to unbrick it. It wasn't hard the whole process took me about 30 min.
And there software will unlock the iphone! or you can pay the other guys in the UK around $80 dollars for the same type of software.
Anyway, I am up to date and realy happy!
BTW: the installer apps have a lot of software, you just have figure which ones you like ...... I have not loaded any yet . until I get more information about the software.