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Run into the same problem. Since my Brokeback Kobo had trouble logging in anyway, I did a factory reset. Luckily turns out after Kobo updates your firmware and authorizes you, it's possible “upgrade” 3.1.1 to 3.0.1 and then turn syncing off. I do suspect the latest firmware is the culprit so I don't fell like updating before something new comes out and is tested by some better men than myself.
Of course, that means I have to go through ADE to upload books I buy from Kobo (or using DeDRM and Calibre) but that beats running the risk of having a disfunctional reader on my hands.
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