Ensure you have upgraded to iPhone OS 3.0
Jailbreak your iPhone 3G using redsn0w or PwnageTool (this will also install Cydia/Icy)
Run Cydia or Icy
Please add the repo repo666.ultrasn0w.com to Cydia or Icy. That last “o” is actually the number zero “0”! If you use the letter “o” you’ll get an error.
Search for ‘ultrasn0w’ in cydia or [...]

Read the whole post in full before attempting anything!
redsn0w is an easy to use, multi-platform, multi-device jailbreaking and unlocking (iPhone 2G only) tool for the iPhone 2G (original iPhone), the iPhone 3G (but not the 3GS) and also the iPod touch (first and second generation). Currently it is available for Windows and Mac OS X [...]

For those not quite sure, you do not need ultrasn0w to unlock the 3.0 firmware on the 1st gen iphones.
If you have a Pwned iphone already, simply download the 3.0 firmware, connect your phone, click SHIFT + the UPDATE button (Don’t click on UPDATE alone) in iTunes – I used version 8.2.
Simple. You’ll have a [...]

Today the Dev Team will post – but not release – a demo of yellowsn0w running under iPhone 3.0 firmware. NB – This is not a carrier unlock for the iPhone 3G S but for the 3.0 firmware that will appear on Tuesday.

There is a new iPhone, coming June 19, about a month earlier than expected. There is a $99 iPhone, available now, which is not good news for Palm (PALM).