iPhone 3GS owners will not be able to unlock their handset right now but everyone still playing with an iPhone 3G that’s running iPhone 3.0 can now unlock it. The iPhone Dev Team has clear instructions for you so all you have to do is backup your phone and use Ultrasn0w to unlock it:

1. Ensure you have upgraded to iPhone OS 3.0
2. Jailbreak your iPhone 3G using redsn0w or PwnageTool (this will also install Cydia/Icy)
3. Run Cydia or Icy
4. 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.
5. Search for ‘ultrasn0w’ in cydia or icy and install ultrasn0w
6. Reboot your iPhone 3G
7. T-Mobile USA users should disable 3G before using ultrasn0w
8. Enjoy

via iPhone Dev Team