DIRECTIONS FOR THIS FIX:
1) Jailbreak the iPhone (use Redsn0w for iPhone 3G, 3GS & 4 and iPad 1; use Absinthe for the iPhone 4S and iPad 2). For iOS 5.1 a tethered jailbreak is currently only available but that's good enough to perform this fix.
2) Download and install 'iExplorer' (link below). It's available for both Mac and PC
http://www.macroplant.com/iexplorer/
3) Connect iPhone to your PC/Mac and run iExplorer
4) Within iExplorer, on the left column navigate to System / Library / LaunchDaemons
5) Within the right column find 'com.apple.iapd.plist', right click then select delete
6) Close iExplorer and reboot the iPhone
7) Enjoy sounds again on your iPhone!