In addition to Nick's answer about Xcode 4.2, you may also need to review your info.plist file. It seems as if new projects started in Xcode 4.2 by default specify 'armv7' in the 'Required Device Capabilities'. You'll need to remove this if wanting to support devices that run armv6 (e.g. the iPhone 3G).
Delete armv7 from the 'Required device capabilities' in yourProjectName-Info.plist