I have had a similar problem. I would get "no service" after a minute or two of using edge. this is a thread I started describing the problems i had.
Tzones problem. Works for a minuite then "no service"
No one ever replied but after messing with the phone for several days i think i found a solution.
I used kiphone to erase my baseband. dfu restore to 1.1.4 then used iliberty + to activate jailbreak and unlock.
Worked great for about two days. then after installing an app from instaler "Ispoof" if it matters. the problem came back immediately. dfu back to 1.1.4 and used iliberty+ again and all is good. using 3.9fakeblank if it matters.
And just to note I have never had a dropped call or bad reception unless i was using the edge network.
Hope this helps you in some way.