i did, multiple times, when the 5.0.1 signing was still open to explore different ways of "restoring" without using itunes in case something goes wrong (i'm on the 4S). it gets stuck on the spinning wheel right after and a simple hard reset (hold power + home) turns it back as if nothing has happened. It's just like the OTA upgrades - it reaches an error before it can do anything to actually harm your iphone and gets stuck there.
if you are going to be so condescending, at least make sure you have tried it yourself and know that you are correct.
i also tried the "reset all settings" option instead of the "erase all contents and settings", which does exactly what you expect it to do - except it erases the settings from most of your jailbroken apps as well (e.g. things like springtomize or SBSettings settings, but not assigned Activator gestures).
The only 2 "problems" i noticed are:
1) some paid cydia apps license gets erased - so you need to go in cydia and reinstall those apps to restore usability. and
2) WeeTrackData's data usage history gets messed up - and it apparently only reloads the "Downloaded" data and not the "Uploaded" from /var/mobile/Media/WeeTrackData/WeeTrackData.plist, which is kinda annoying because even though you can fix the total by adding initial data offset, you can't get the correct download/upload stats until the next month.
As for the OP's problem with cydia, if you have MobileTerminal or SSH or iFile, you can download cydia_1.1.6_iphoneos-arm.deb, put it in root, and use terminal and login as root/alpine (or whatever your password is) and type "
dpkg -i cydia_1.1.6_iphoneos-arm.deb" to install it.
if you don't have any of those means to install a .deb file, you can follow instructions here WORD FOR WORD, to fix cydia.
https://forums.macrumors.com/posts/14738254/