It doesn't sound like it's a kernel panic, though; based on the description, it sounds like the issue is with the UI ("Springboard"), which explains why jailbroken devices (which usually have Cydia's "substrate" installed to catch Springboard crashes) are kicked to "safe mode" instead of outright crashing.

The most plausible hypothesis I've heard so far (mixed with my own speculation) is that whatever code handles notifications runs into some sort of resource exhaustion (whether it's a memory overflow or an integer overflow or somesuch), causing Springboard to segfault. Cydia's substrate catches this on jailbroken devices, causing Springboard to enter Safe Mode (which is unaffected by this bug), while non-jailbroken devices - unable to handle Springboard crashing - resort to rebooting.