Many of iPhone users experienced problems with microphone of iPhone 4 as it stopped working after iOS 5 jailbreak using Redsn0w 0.9.9b7. After trying FaceTime with contacts, they still have the same problem, no one of contacts could hear them but they could hear their contacts clearly. It is kind of strange as microphone is functioning properly with the Voice Memos app through regular phone calls.
How to Fix Microphone Problem After iOS 5 / 5.0.1 Jailbreak
The only reason behind the stated problem seems that jailbreaking process has not been done through iTunes. In order to jailbreak and iOS device you have to connect your device with iTuens and follow the instruction appears in redsn0w.
However we also have some readers complaining that they have been facing the same problem even after following this process. The possible reason working behind it might be that you activated your device using Redsnow and then getting over it can be done when you activate it to iTunes or SAM. Downloading and installing some jailbreak apps or tweaks in Cydia store might also be the reason for it. In this case, it is recommended that you uninstall all such apps by going in the Manage Tab in Cydia.
After trying all these steps and still facing the error, the last that we can recommend is that you restore your iPhone to the stock iOS 5.0.1 firmware and jailbreak it using Redsn0w 0.9.9b8.
This new iPhone firmware will surely help you stay safe from any untethered jailbreak once publically available; it helps to fix the exploit that has been built up by pod2G and the iPhone Dev-Team.