htc wildfire s after update to 2.3.5 - cannot install any app
I had the same problem, tried cleaning cache and data with no result.

So I went in settings > applications > manage apps > all, picked the download manager and "uninstalled the updates". It told me the app would reset to factory settings, and when I started the phone again, it was running marketplace 3.4.4 and I managed to update and install apps normally after that. 

Disclaimer: I only tried that because I planed to do a factory reset if I broke everything. I don't guarantee the results.