I'm having the same problem. Here's what I did.
I had a 1.0.2 phone that was unlocked (not sure what method was used, but if this matters, I can probably find out), so I used the Virginizer via
http://i.unlock.no, then did a restore to 1.1.1, then used the "Do it all" feature in ZiPhone to Jailbreak, Activate and Unlock. Everything seemed to go OK except that now it won't recognize any carriers when I have my Rogers SIM card inserted. I tried putting in the original SIM card that came with the phone and then doing the same process, but it does the same thing when I put the Rogers SIM card back in (No Service) although the Carrier option from settings can still be accessed - all that can be chosen is Automatic or Manual - Rogers won't show up though. I did some reading on the seczone possibly being damaged, but I'm not really sure what this is or if this is related to my problem. If anyone has been successful in fixing a problem similar to what I listed above, or if someone can point me in the right direction, I'd be very grateful so that I don't have too much downtime on my phone. I've been avoiding doing this upgrade for months now, and finally got antsy since ZiPhone seemed to automate the process for noobs like me.
As for some background info, when my phone was in 1.0.2 there was an app on the home screen called "Unlock" which I assume was there from the old unlock method. I remember back when I had 1.0.2 I got the No Service problem every now and then, but all I had to do was go to the Unlock app and hit "Start" and it would run some processes and then reboot the phone, and it worked again. Of course, since I upgraded to 1.1.1 I lost that app (unless it is hidden and causing a problem). I also had installer on there, and a backgammon app, and possibly something else, and I meant to uninstall all of these before doing the upgrade but forgot. Also, after using the automated process on ZiPhone, it did not install the installer app. I had to do this manually from jailbreakme.com.
I'm stuck. I feel like I'm just wasting my time virginizing and restoring. What is my safest and most effective method for getting the Rogers SIM card recognized again like it was on 1.0.2? Is there a way I can clear those hidden apps or somehow re-access the old Unlock app that used to fix this issue when I had 1.0.2? Perhaps something needs to be repaired? I even tried changing my IMEI to the number on the back of the phone but no luck. Any help is much appreciated! Thanks in advance.
EDIT: I've read about downgrading the baseband, but I'm not sure what this will mean exactly. Is it worth a shot?