After upgrading my iPhone with pwnage tool 3.1, I no longer had AT&T cellular service. The phone would not display the AT&T Carrier text, and data could only be transferred via WiFi.  The text would alternate between Searching… and No Service.

I’ve realized that the issue is that pwnage tool will automatically select “Activate” when Jailbreaking the firmware image.

In order to use your iPhone with OS 3.1 and AT&T, remember not to select Activate when jailbreaking.

Select General to modify Activation options.

Remember to unselect Activate the Phone.  This will allow the iPhone to work on AT&T with the proper activation.