XCode stops working as soon as a developer installs iPhone OS 3.0.1!  Apple issued an advisory with a workaround:

http://adcdownload.apple.com/iphone/iphone_sdk_3.0__final/iphone_os_3.0.1_advisory.pdf

This document basically says the follwing:

iPhone OS 3.0 SDK and iPhone OS 3.0.1 software release for 

Mac OS X v10.5.7 

To continue development with iPhone SDK 3.0 on your iPhone, iPhone 3G and 

iPhone 3GS running iPhone OS 3.0.1 will need to perform the following: 

1. Log into your Mac with an Admin account and launch the Terminal application          

(/Applications/Utilities) 

2. Copy and paste the following line into Terminal: 

ln -s /Developer/Platforms/iPhoneOS.platform/DeviceSupport/3.0\ \(7A341\) / 

Developer/Platforms/iPhoneOS.platform/DeviceSupport/3.0.1 

Note: If you installed iPhone SDK 3.0 somewhere other than the default /Developer 

location, replace the "/Developer" directory as appropriate. 

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