Well, all I can say is that after thirty years of working in software the only rule is that you don't upgrade anything unless you have a problem. That works fine with all software. Your experience seems to prove that rule.
If you downgraded CDM, why are you not happy if it worked before? And as you seem to have upgraded both iTunes and your iPhone software, why do you think this is a CDM problem?
So, I guess you never upgrade a virus scanner, until you have a virus. Or you never upgrade a web browser before someone use the wide open gate to your computer.... the list could be continued...
I think you know about the list of changes in ver 1.6.1.0 - there is a long list of fixes in it (-"fix: resync issues with certain long-running movies; fix: Any lipsync issues sould be resolved now; - transcoding speed should be greatly improved especially on multi-core systems now"....) - More than enough reason to try the upgrade.
Why did you deny, that CDM could be the reason for the problems?
- movies made by the elder version of CDM worke fine with OS 2.2, OS 3, iTunes 8.1, iTunes 8.2.
- movies made by 1.6.1.0 never worked.
I have no idea when I upgraded to iTunes 8.2. But when I upgrade CDM to 1.6.1.0 the iPhone still worked with OS 2 - movies made before this upgrade work, movies made after the upgrade of CDM didn´t.
The upgrade to OS 3 came later - and had no effect.
Downgrading to 1.2 and the movies are working again... On my iPhone OS 3 and iTunes 8.2....
Same movie - first file made with 1.6.1.0, second file made with 1.2
Both made on the same day, with no changes on iTunes / iPhone. First file didn´t work, second file work fine. So why should the problem be caused by apple software?