After lots of messing around (with much guidance from people here), I got some understanding of the OSX file system. My files were not set up as expected (maybe because I upgraded XCode to 3.1). If anyone else runs into the same issue, here's what you need to do:
1) Log into your Mac with an Admin account and launch the Terminal application (/Applications/Utilities)
2) Check to see where your system keeps files for supporting iPhone 3.0:
ls -l /Developer/Platforms/iPhoneOS.platform/DeviceSupport/
3) Look for a file like 3.0. You may see "3.0" (like me), "3.0 (7A341)", or something else
4) Make a link so XCode looks for 3.0.1 in the 3.0 location. Some examples:
ln -s /Developer/Platforms/iPhoneOS.platform/DeviceSupport/3.0 /Developer/Platforms/iPhoneOS.platform/DeviceSupport/3.0.1
ln -s /Developer/Platforms/iPhoneOS.platform/DeviceSupport/3.0\ \(7A341\) /Developer/Platforms/iPhoneOS.platform/DeviceSupport/3.0.1
5) Confirm this works by restarting XCode and opening the organizer
As Benjamin points out, do not upgrade to 3.1 unless really needed.