We looked around and found that he's not alone. There's a thread on Apple's Discussion Boards reporting the same thing. It's affecting both the iPod touch and the iPhone. Apparently 3.0 is specifically designed to reject 3rd party cables, strictly on the premise that they fail the "Made by Apple" test. One poster on the discussion board notes that the original Apple Component AV cable and dock work fine. Sure, you could restore and downgrade, but that seems silly.
Of course, no company has a responsibility to support 3rd party devices, so my friend is out of luck. But we're sympathetic. If you're affected by this issue, all we can say is it's probably time to pony up for a cable from Apple.