UPDATE : iPhone 3GS has a different security feature which disables it from using any other firmware rather than the latest available. So, if you still need Unlock and Jailbreak, custom firmware (look in categories) is the only option we have. The following article is not recommended anymore. Thank you.
Geohot rules yet again! He was the one to have unlocked the iPhone first generation phone back in 2007 and now, he is back with more! This time it is iPhone 3GS that is unlocked and jailbroken by the hacking maestro …

The Dev Team did it yet again! The cat and mouse game is on! All iPhone 3G owners (no matter what firmware you have) can now unlock their devices!

Lets get started with a step by step guide (It will be a short one this time around!)
1) Update your iPhone 3G to 3.0 . You have two options here :

redsn0w (DIY Quick!)
Pwnage Tool (Download the Custom Firmware 3.0 if you want to Jailbreak directly without messing with other tools)

Redsn0w is a revolutionary way to jailbreak, activate, unlock an array of Apple’s devices based on iPhone 3.0 firmware. Devices like iPhone 2G, iPhone 3G, iPhone 3GS, iPod Touch 1G/2G can easily be jailbroken, activated and unlocked (iPhone 2G – Automatic, iPhone 3G – Manually via Cydia & Ultrasn0w).
If you don’t want to go through the following steps and you just want the real deal, follow this guide rather wherein you can download the custom firmware file which should do the job for you!
The tool itself is so neatly packaged …

iPhone Dev-Team delivers again in style! All the basebands for iPhone 2G, 3G released till June ’09 are unlockable by software means, thanks to the super famous yellowsn0w. Pwnage tool and QuickPWN are being worked upon to be ready for the D-day! Please throw away the turbo sims and refrain from buying into their propaganda! The entire jailbreak community will be able to upgrade to the latest in Apple’s offering – the revolutionary iPhone 3.0 software which managed to sneak in the most awaited features – MMS, tethering, Copy/Paste and …

If you have to just modify the iPhone 3G baseband to 2.28 without updating the firmware to 2.2 or 2.2.1, this is the easiest method to follow! The main reason for only upgrading the baseband to 2.28 is to achieve software unlock and still preserving all the jailbreak apps and appstore apps on the iPhone 3G. This has nothing to do with downgrading the baseband from 2.30 to 2.28 though.
Steps required in order :
1) Download ICE2_02.28.00.eep, ICE2_02.28.00.fls, BBUpdaterExtreme from this rapidshare link

2) Make sure your iPhone 3G is jailbroken and …

For a change, I published 3 videos which definitely enables a total noob to unlock his/her iPhone without much difficulty. Latest Firmware via iTunes (2.2), QuickPwn (Jailbreak) and yellowsn0w via Cydia/installer (Unlock) hold the three key steps for a successful unlock.
Before proceeding further, make sure you are equipped with the following :
1) Strictly iPhone 3G Updated to 2.2 firmware via iTunes (2G iPhones have a different process – BootNeuter from Cydia).
2) Intel Mac (10.5.6 s/w update) or Windows machine. [Mac users, make sure DFU mode is enabled (10.5.6 s.w update …

Such a wonderful feat, a blessing for all those who accidentally updated their iPhones to 2.2 (2.28 baseband). Dev Team hinted a 2.28 unlock in a screenshot released today boasting the ever popular 2.28 baseband unlock. Please STOP buying x-SIMs from China and look out for the real deal on Cydia : today (Dec 31st) at 11:59 PM EST. All the iPhones in the world released to date are unlockable via a software means and please refrain from buying software unlock from any website since Dev Team intends it to …

Short and sweet! The software unlock software codenamed yellowsn0w is first uploaded to the iPhone and then it is run via OpenSSH on a Mac, simple huh! Even simpler is the fact that it takes less than 8 seconds from running the software to actually seeing the new carrier’s signal! This functionality will be neatly packaged into an App which will be available on Cydia this New Year’s eve. Merry Christmas everybody!

iPhone 3G Unlock (codename : yellowsn0w) is finally ready for general consumption with an anticipated release date of December 25 ~ 31 (Christmas — > New Year’s eve!). It is currently undergoing idiot proof GUI packaging for the total noobs! However, those users who accidentally upgraded to 2.2 firmware from iTunes have no other choice but to resort to x-Sim solutions or a possible baseband downgrade from 2.28 to 2.11 (hopefully).
Great job iPhone Dev Team, you really rock the iPhone world and Apple likes it too, not sure about ATT …

UPDATE : Software solution now released!
UPDATE : iPhone 3G 2.28 baseband is unhackable, all x-SIMs in the market saw a miserable failure (I have tested some and all of the rely on a IMSI spoof which was broken with 2.28. Buyer beware!
It is time for iPhone firmware 2.2 accidental upgrade users! Though iPhone devs have been hard at work chasing 2.11 baseband (they claim to have the unlock solution for 1.45, awaiting a 2.11 downgrade and a simple to use GUI). A much anticipated date of around Christmas for the …