Should I restore because of this?

mines fine I love my jailbreak only you can decide if you don't.

 

I update normally through Itunes both via 30 pin and itunes app on my phone never had a sinfle issue with that in over 3 years.

 

I can't update iPhoto because it requires 5.1 but I still can update everything else just fine. I would think hitting update all it would do everything but the 5.1 app.

You can also click on individual apps in the update list and click update.

Also, there are plenty of "red badge" clearing tweaks in cydia...do some research and find one that will clear that one app from notifying you.

 

the apps u are talking about are specific to iOS 5.1. You will never be able to load those, intil u update. But yes, you can still update your other apps that are for 5.0.1 and lower per normal. I did it just last night.

If the badge bothers you, go into cydia and download the tweak badgeclear or badgeremover. the first removes the updates fromjust the app you select, while thoe other removes all badges from all apps.

 

And you can also update to 5.1 and re-jailbreak since you have a 4, not a 4s. It'll be a semi-tethered, which means you need to use redsn0w when you reboot...but that's really not a big deal honestly

 

If you are trying to run 5.1 apps on a 5.0.1 device it will not work. If you have a 5.0.1 app that needs to be updated along with a 5.1 app when you update all the 5.1 app update should be rejected and it should continue the update with the 5.0.1 app. If this does not work you can connect your device to itunes and manually update each app individually. Search the app you are looking to update and click “update” as if you were purchasing the app. Once finished sync your device and all should be good. If you would like to use 5.1 apps you have two options 1. Use a tethered jailbreak that is specifically for for 5.1 (note: this does not work on iPhone 4s or iPad 2) or 2. Don’t restore and don’t jailbreak

What exactly do you mean by “your phone is slower”? Are you speaking of launching apps or web surfing? But overall phone is going to be slower with a jailbreak just for the simple fact that you are breaking Apple’s software however there should not be significant speed decrease when launching apps.

 

The issues the OP is having are due to operator error
As stated, apps can be individually selected and updated.

And a quick search with Google would have shown there are several Cydia tweaks to hide that red number that bothers him/her.