Been using this hosts file for most of the weekend, blocks ad's from Cydia, Apps and Safari. The site is blocked at work so I've emailed myself from my phone and posting it here....
http://www.sinfuliphone.com/showthread.php?t=107743
(Hopefully that links allowed?)
I used the standard 127. one, think its near the end of the thread. SSH it to the etc folder and respring, suggest you back up the old one just incase.
If your running SBSettings you will need to launch it and fix permissions then it will work fine.
End result, Cydia loads much faster and almost all ads are gone, you do get one or two here and there, but its a big improvement. Ad's from apps are all gone too, Met office app for example.