I keep getting hung up on this, so this post is as much for me as it is for you. These are the steps for how to upgrade an already-jailbroken device to a new iOS version, preserve your Cydia apps, as well as restore it with all of your legit app-store apps and music and whatnot.
- iTunes (probably the latest version would be a good move)
- Jailbroken iDevice (duh)
- iDevice USB cable
- Jailbreak tool — RedsnOw or Absinthe (I read Redmondpie.com to keep up to date on this stuff)
- BACK YOUR SHIT UP
Seriously. Plug your iDevice into iTunes and right-click it and make a backup.
- Use AptBackup to preserve your list of Cydia apps.
There are some paid options too, but this one is free and good enough.
- BACK YOUR SHIT UP AGAIN.
This time, iTunes will preserve the list of your Cydia apps that AptBackup makes.
- Use OpenIPSW to download the correct IPSW file for your device on your computer.
Actually, you could probably do this as the first step since it’ll take a while to download.
- Restore your device with iTunes, selecting the IPSW file you downloaded.
- Don’t restore from the backup yet
- Re-Jailbreak your device while it’s freshly-restored.
- Assuming your jailbreak went well, you can try restoring from your iTunes/iCloud backup now.
- Once you’re jailbroken and running happily and all that, install AptBackup again and restore your Cydia purchases
YMMV. This worked for me last time (4.3.4 → 5.0.1), and hopefully it’s going to work again this time (5.0 → 5.1.1)