Yes, I have seen this same problem (though on a different laptop DVD drive). What has happened is that the lens/laser within the drive that reads CD/CDR/CDRW media is damaged or dirty, but the DVD laser/lens is OK.
Just to ensure I understand you correctly...the drive was working fine, then you updated the firmware on the drive, and now it won't read CDs? If these were "region free" hacked firmwares for the drive, well sorry that's the risk you take. Other than that, maybe one of logansfury's links will help you (look to be older firmwares than the 1.07 you're using now). Its possible that the firmware you flased wasn't compatible with your specific revision of drive, or you couldn't update from the version you had to 1.07.
-dog*
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by: logansfuryPosted on 2003-04-23 at 10:06:22ID: 8381837
Download the new firmware: /k11f_103. zip or /k11f_105. zip
au/multime dia/softwa re/utility / dvdutils_ 103.zip
http://pioneerdvd.rpc1.org
http://pioneerdvd.rpc1.org
Try these utilities too:
http://www.pioneeraus.com.
It should update any bugs in the device, that might prevent it from reading certain media.