So I took the step upgrading to Xcode 3.2.5 (iPhone SDK 4.2) and now I cannot run to device. I always see this now in the dev environment:
I solved this problem, by doing this:
Project->Edit Project Settings->Build->Base SDK->Latest SDK (4.2)
Project->Edit Project Settings->Build->iOS Target Deployment->iOS 4.2
Project->Edit Active Target (myTarget)->Base SDK->Latest SDK (4.2)
Project->Edit Active Target (myTarget)->iOS Target Deployment->iOS 4.2
And, If you still have problems:
Click the box that says base SDK missing, and select:
Simulator -> Debug
That should do it.