Ok, simple fix to this "there is no SDK with the name or path 'iphoneos3.0'" problem, you obviously forgot to set the SDK to iOS4 ... oh, but it's already set ...
Fortunately i'm here to save you some time and pain. What you actually need to do is navigate to the three20/src folder, and open each and every one of the three20 components and set project base SDK to iOS 4.0 and the deployment target to 3.0/3.1.
Once you do this to all the "dependencies", you should find that the project will compile and run just fine. There are few forks on github where peeps have done this for you, however i like to always pull from the main trunk where possible, so i'd rather do it myself.