I think theyre getting confused with what is firmware and what is the baseband and thinking theyre the same thing. At least, thats what it seems like.
Some definitions:
Baseband: This is the processor that manages all the functions which need an antenna. The GSM phone, as well as the WiFi and bluetooth are all under the control of the baseband processor. The baseband processor has its own RAM and FLASH resources, separate from the ARM core resources. The baseband processor is a resource to the OS. 5.11.07 is one example of a baseband for the iPhone.
Firmware: This is what youd think of as the Operating System that tells all the hardware what to do. So, OS 3.1.3 would be one of the firmwares for an iPhone.
Applejuiced, Pixelated, DHLizard or thelatinist can jump in and correct me if I didnt quite capture the concepts.
Also, PwnageTool is what is used to make a custom firmware. It takes the normal firmware youd use from Apple, does some magic, and then you have a custom firmware you can then restore with that DOES NOT upgrade the baseband.