Just do a restore within iTunes. It wipes and reloads the firmware onto your Touch and brings it back to factory status (what it was like in the box).
You might want to hold off on that for just a little while though, since there should be a way to allow 1.1.1 to upgrade to 1.1.2 while jailbroken. If you upgraded now, you'd have to downgrade to 1.1.1 to re-jailbreak, and then do the special upgrade.
But yeah, restore mode will do it. I've done it three times already, just so I could use every jailbreak method for the joy of it. ;-)