Gemara

(Abaye): If Shimon testified and was Huzam, all testimony that he gave or will give after his fabricated testimony are invalid;

(Rava): Only testimony he gives after he was Huzam is invalid.

Abaye disqualifies him retroactively. He is a Rasha from when he testified, and the Torah says "do not put... a Rasha (to be a) witness";

Version #1: Rava disqualifies from now and onwards, because the law of Edim Zomemim is a Chidush (exception):

Why should we believe the latter witnesses (Mezimim), who say that the first pair lied? Perhaps the latter are lying! The Torah's Chidush is that in this trial (and surely, for future testimonies) we say that the first pair lied. We have no source to consider them liars before this!

Version #2: Rava agrees that (mid'Oraisa) he is disqualified retroactively. Chachamim enacted that he is disqualified only from now and onwards to prevent a loss to buyers (who used these witnesses to sign their documents of purchase).

Question: Practically, what do the two versions argue about?

Answer #1: A different pair of witnesses was Mezim each witness. (It is no Chidush to believe two Mezimim against one witness.)

Answer #2: There was no Hazamah. Rather witnesses testified, and other witnesses said that they had stolen beforehand (so they were invalid witnesses).

In both of these cases, it is no Chidush to believe the latter witnesses. Rava disqualifies the first witnesses retroactively only according to Version #1.

R. Yirmeyah mi'Difti: A case occurred, and Rav Papa ruled like Rava.

(Rav Ashi): The Halachah follows Abaye.

The Halachah follows Abaye against Rava in six places. This is one of them.

Rishonim

Rif and Rosh (7:6): The Halachah follows Abaye.

Rambam (Hilchos Edus 10:4): An Ed Zomem is disqualified mid'Oraisa from all testimony, even if he was Huzam for monetary testimony and paid. He is disqualified from when he testified, even if he was not Huzam until many days later.

Question (Tur CM 34:15): Why is he disqualified even after returning the money? Perhaps since he returned due to coercion of Beis Din, he is not Kosher until he repents by himself.

Answer (Beis Yosef DH v'Efshar and Kesef Mishneh): He is disqualified even if he returned the money by himself. If he was Huzam for other testimony, after he was lashed he is Kosher again (Rambam 12:4). Until he is lashed he is disqualified, even if he paid much money. One might have thought that one Huzam for monetary testimony, for which he pays and is not lashed, he is Kosher after paying. The Rambam teaches that this is not so. Rather, he is like a thief. One who sinned about money is disqualified until he repents, even after he returned the money (Sanhedrin 25b).

Rebuttal (Bach): The Tur is more reasonable. Whenever Edim Zomemim willingly returned the money, presumably they repented and will not sin again. They are unlike gamblers, lenders who take Ribis, etc., who often return to their old ways. They must accept in front of Beis Din. Established thieves are like Edim Zomemim; it suffices if they willingly repented. If one stole only once, he is Kosher after returning it, even if Beis Din forced him.

Poskim

Shulchan Aruch (CM 34:8): An Ed Zomem is disqualified from all testimony, even if he was Huzam for monetary testimony and paid.

SMA (19): All the more so he is disqualified if he testified about something for which one does not pay, even if he was Huzam before sentence was passed.

Shulchan Aruch (ibid.): He is disqualified from when he testified, even if he was not Huzam until many days later.

R. Akiva Eiger: He is disqualified also for testimony Toch Kedei Dibur before the testimony for which he was Huzam (Ramban Bava Basra 31a DH Omar, based on Bava Kama 73a). However, the Shitah Mekubetzes says that this is when both testimonies were for the same parties. If not, the first testimony is Kosher. The Maharit (1:138) disqualifies any testimony Toch Kedei Dibur before the witnesses did any Aveirah that disqualifies from testimony.

Question (Chachmas Shlomo): Why didn't the Gemara say that the two versions argue about Isurim, e.g. the witnesses testified on a Get or Kidushin or a capital case in between? If Rava is Machshir because it is a Chidush, the witnesses are totally Kosher until Hazamah. If it is due to concern for buyers, this applies only to money, for Hefker Beis Din Hefker. Chachamim cannot override Isurei Torah in which one does an act. Tosfos (Yevamos 90b DH v'Ligmor) says that they have the power when needed to correct a breach. However, it does not seem that this applies to Isur here.

Answer (Chachmas Shlomo): In Version #1, Abaye agrees that Edim Zomemim is a Chidush. The Torah disqualifies witnesses only from when they were Huzam. Because the witnesses contradict each other; it is a Safek who is lying. Mid'Oraisa they keep their Chazakah (each pair is Kosher) from when they testified until now. Mid'Rabanan we are stringent about contradictory witnesses, so they are disqualified retroactively. Rava holds that Chezkas Kashrus is stronger than other Chazakos, and we are not stringent about it when there are contradictory witnesses. Alternatively, since the Torah was stringent to disqualify him absolutely, Chachamim were not stringent to disqualify him retroactively. In Version #2, Rava is Machshir retroactively lest buyers lose. All agree that Edim Zomemim is a Chidush mid'Oraisa, but mid'Rabanan it is no Chidush (we disqualify contradictory witnesses), so it would be proper to disqualify them retroactively. Rava holds that we did not (rather, stuck to Torah law) lest buyers lose. Also regarding Isur we do not disqualify mid'Rabanan, lest people disqualify them even for monetary cases. When a different pair of witnesses was Mezim each witness, it is no Chidush to believe the Mezimim. Mid'Oraisa they are disqualified retroactively. Due to Hefker Beis Din Hefker, we are Machshir the testimony before Hazamah.

Note: When two pairs of witnesses contradict each other, the Halachah follows Rav Huna (Bava Basra 31b), who says that we leave each on its Chazakah (even mid'Rabanan). Why didn't the Gemara suggest that Abaye is Machshir because he holds like Rav Huna?