There are two common issues you may face when restoring your backup:

1) iPhone won’t reboot – just apple logo and maybe vibration every 10 seconds.
2) iPhone backup works fine. But now you only have a few icons. Cydia is missing. What can you do where did all your icons go?

The answers to these follow.

First, to address issue #2, missing icons (because this one is easier). This occurs because you had installed categories and moved a bunch of files into folders. When you restore, your springboard plist will be restore and that contains a bunch of hidden icons. Here are your options

1) Prevent this situation by unhiding icons and/or deleting your folders before you do yoru final backup before you upgrade

2) After your jailbreak ends, before you restore your backup, install some things that will help you such as: openssh, poof, bossprefs (any of these you did not have installed before would be great). Here is a prioritized list of options:

a) Install Poof if BossPrefs was hidden install BossPrefs if Poof was hidden. Either of these can completely unhide all your apps. If both were used and hidden then move to B.

b) If settings is available, run that. Enable restrictions, disable restrictions. All your apps will be visible. If settings was hidden, move to C.

c) SSH into the iPhone with scp or ssh. If you don’t know how, use this guide. Navigate yourself over to /var/mobile/Library/Preferences and delete com.apple.springboard.plist. Respring your iPhone by typing “killall SpringBoard” into SSH or, if you don’t know how to do that, just reboot. All your hidden apps will be visible.

The first issue, the iphone that won’t reboot, can be caused by a couple things. One is having 5 icon dock installed and then restoring the backup without it installed. To prevent this, install 5 icon dock prior to restoring the backup. Also install openSSH before restoring your backup. In worst case event, you can ssh in and delete /var/mobile/Library/Preferences/com.apple.springboard.plist. This should let the iPhone boot up.

Note: if you had jailbroken and decided not to jailbreak 2.1 you are screwed. You must jailbreak to fix this.