Although your +0.12 rep will count as nothing, I'm going to purely do this because I :love: NGU.
What you gotta do is:
-Put the original iOS on (which came with the iPhone), then upgrade to 4.2.1, or 4.1, DO NOT UPGRADE TO 4.3!
-Then jailbreak it using Sn0wbreeze, iReb, or Greenpois0n.
-Then everything should work...
The reason why I said not to upgrade to 4.3 is because 4.3's jailbreak is extremely glitchy with certain models of the iDevice, and can cause the iDevice(s) to go into Safemode, and crash the iOS permanently, whilst other cases have reported that it either temp-bricks or fully bricks their iDevice.
Safest bet is to go back to 4.2 or 4.1.1. (PS - I've got an iPhone 4 running 4.2 jailbroken =D)
iREB cant jailbreak, only help you into pwned DFU, redns0w0.9.6rc8 is the best to get into pwned DFU though.