MOD EDIT: Since apple stopped signing of 3.1.2 and 3.1.3 Firmwares, one major requirement that was not mentioned in the tutorial is that you should have the 3.1.3 SHSH blob saved thru saurik server (clicked make my life easier in cydia when still on 3.1.3) in order to downgrade 3gs to 3.1.3

Found this great tutorial on how to downgrade iOS4 to 3.1.3. Basically, it just saves you from being on Recovery mode after the long wait and the error.

Here's the tutorial: idowngrader.wordpress.com/2010/06/19/downgrade-4-to-3-1-3/

You'll need the RecBoot program to Exit Recovery Mode. I've tried it using Mac coz the program didn't work on my Win7 (sadly).

In case you guys don't wanna read the tutorial. Here you go.
Step 1: Connect to Computer, and turn iPhone/iTouch power off.

Step 2: Hold both Home+Power buttons for about 10 seconds, then release the Power button but continue holding the Home button until your computer recognizes it.

Step 3: (MAC users) Hold the Option button and click Restore. Then locate the 3.1.3 firmware you downloaded. (WIN users) Hold Shift and click Restore. Then locate the 3.1.3 firmware you downloaded. Let it restore your iPhone or iTouch to 3.1.3 or lower, which may take up to 10-15 minutes. When completed you should get an error message.

Step 4: Use the program you can download below, and click Exit Recovery Mode.

Step 5: Let your iPhone or iTouch activate in iTunes, then if needed, Restore from old backups.]

UPDATE: Net Framework 4.0 is needed for the RecBoot.exe to run on Windows. (Thanks mriphone!)

Big question: WHY DOWNGRADE? - Coz I miss my themes and for some reason, I'm having problems with the internet connection in 3G.