This is for the VGA version:
Okay, so I have the DUI arrest in the jail, but whenever I go to remove the cuffs, I turn around for whatever reason and he knocks me out. I'd really hate to restart the entire game so I was wondering if there was a way to get past this annoying problem.

Did you talk to the drunk before removing his cuffs? And after you removed them, did you wait for him to enter his jail cell before you turned around?

I did, and after Paul tells me that I need to remove his cuffs I do. I don't press anything, and Bonds pretty much immediately turns around and gets decked.

You have to cuff him from behind. This happens if you cuff him from in front.

Necroing this because this problem nearly made me give up.

I had the same problem (even when I had the drunk cuffed from behind). The solution was simple: you have to leave your gun in the gun locker BEFORE entering the jail (the lockers are near the button you need to press to enter the jail).

I assume if you don't do this, what happens is that the drunk takes your gun and shoots you.