Today the unlock software from Dev Team, redsn0w, was released. Redsn0w enables every iPhone 3G owner (not 3GS) to jailbreak the phone.
The installation is actually simple. I downloaded the firmware (iPhone1,2_3.0_7A341_Restore.ipsw) and upgraded my phone from OS 2.2.1 to OS 3.0 through iTunes.
After downloading the iPhone1,2_3.0_7A341_Restore.zip file, rename the file to iPhone1,2_3.0_7A341_Restore.ipsw.
Connect your iPhone to your computer and start iTunes. Select "restore" and then select the firmware that you downloaded on the website mentioned above. Do nothing during the upgrade untill its finished.
When the iPhone is upgraded, start the redsn0w application (see dev team blog for download mirrors). Clearly read the instructions on the screen. First you will be asked to completely switch off the phone while it is still connected to your computer. Switch off the phone by holding in the power button for a couple of seconds and then slide the power off widget in the screen. After clicking next, the phone restarts and you will be asked to hold the power button, then the power and home button and finally only the home button. Then the jailbreak procedure will start, just wait until it completes.
When you see "done" in the screen, the iPhone will complete the jailbreak and your phone is jailbroken.
Note: NOW YOUR IPHONE IS UNLOCKED YOU CAN UNLOCK BY INSTALLING ULTRASN0W .