Use 4.0 or the latest revisions of Dolphin. Save states will be greatly more reliable now than they were then. Also, anything older than 4.0 is not supported on the forums (and you really should upgrade to the latest dev builds for the speed boosts too...)
Your 3.5 save states are corrupt; there's probably no way you can reasonably fix them. You'll have to start from scratch when switching to 4.0+ (3.5 save states are incompatible with 4.0 anyway) unless you have in-game saves available.
Your 3.5 save states are corrupt; there's probably no way you can reasonably fix them. You'll have to start from scratch when switching to 4.0+ (3.5 save states are incompatible with 4.0 anyway) unless you have in-game saves available.