Ahh, i had this problem, it's because the version that cydia has isn't compatible with the latest jailbreak.
However, there is a way around it, as there is a newer version of the terminal app you can get (well, it works on 4.1, i've not upgraded to 4.2 yet) You'll have to search for it on google, i'd help but i'm at work now and pretty much everything fun is blocked;p
I think i searched for terminal incompatible with jailbreak 4.1 and it gave me a how-to guide to get the latest terminal version, which has been working for me.
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Ahh, i had this problem, it's because the version that cydia has isn't compatible with the latest jailbreak. However, there is a way around it, as there is a newer version of the terminal app you can get (well, it works on 4.1, i've not upgraded to 4.2 yet) You'll have to search for it on google, i'd help but i'm at work now and pretty much everything fun is blocked ;p
I think i searched for terminal incompatible with jailbreak 4.1 and it gave me a how-to guide to get the latest terminal version, which has been working for me.