I am using an iPhone 3GS that is jailbroken and uses iOS version 4.1. How can I update my phone to the latest version?
Back up your phone.
Un-jailbreak your iPhone. (Reset to factory settings in your settings menu.)
Update with iTunes.
Re-jailbreak your phone.
Restore your backup.
Enjoy the rest of your day!
i have the same situation did u find a way to upgrade
Basically you would need install the image, IPSW, for the latest firmware that has been released.
This guide should help : http://www.coolestguyplanet.net/upgrade-jailbroken-iphone-to-ios-5-and-preserve-baseband-with-redsn0w/#bootrom
Also a video about updating iDevices:http://www.youtube.com/watch?v=_DBBHjxQgrA