Tips for upgrading to iOS 5.0.1
As of December 27, 2011
Jailbreaking: After upgrading (which un-jailbreaks your device), you can use redsn0w to do a untethered jailbreak of iOS 5.0.1 on devices except iPad 2 and iPhone 4S.
Upgrading: If your device is unofficially carrier-unlocked using ultrasn0w, you need to use redsn0w or PwnageTool to build a custom IPSW (firmware file) to upgrade while preserving your baseband. Non-unlockers can use the standard iTunes restore + upgrade process to upgrade their devices (and then jailbreak again); it's OK to use a backup from a jailbroken device.
Errors: If you encounter a 3194 error, 1600 error, or other error while upgrading, you probably need to fix your hosts file. If you've used TinyUmbrella: open it, look under "Advanced", and make sure "set hosts to Cydia on exit" is unchecked.
Cydia: Many packages have been updated to work on iOS 5, but not all of them. Check package pages for information, and/or follow developers and themers on Twitter for status updates on their work.
Baseband: If you use iTunes to upgrade your iPhone to iOS 5, it'll also upgrade the iPhone baseband. The iOS 5 baseband isn't very compatible with iOS 4, which means that if you later downgrade to iOS 4 using saved SHSH, your device will have reduced signal until you go back to iOS 5.
Cydia Store: You can always sign in with "Manage Account" (on the Cydia homepage) to get access to your previously-purchased Cydia products.