Update : Ultrasn0w has been updated !! Instructions below. New Ultrasn0w unlocks all iPhone versions !!
Thanks to sherif_hashim who found the exploit, the dev team has updated UltraSn0w. The updated UltraSn0w can be installed via Cydia in the Ultrasn0w repository. The new ultrasn0w works on all 3.0 and 4.0 baseband versions for 3g and 3gs devices. Â For those of you currently unlocked and having wifi issues, you can now remove blacksn0w and install ultrasn0w and be up and running in a more stable fashion. If you are updating from blacksn0w, make sure you uninstall blacksn0w in cydia before installing ultrasn0w. If you installed blacksn0w via blackra1n, you probably need to restore. Note, this is an unlock. There is no official 4.0 jailbreak yet.
These are instructions on how to unlock the iPhone 3G and iPhone 3GS for use with any GSM cellphone carrier using UltraSn0w. This will work with the iOS 4.0 firmware.
Before you can follow these instructions you must have a jailbroken iPhone and you must be on the 04.26.08, 05.11.07, 05.12.01, or 05.13.04 baseband(modem firmware).
If you are on T-Mobile remember to turn off 3G before starting…
Step One Press to launch Cydia Installer from your SpringBoard.
Step Two Press to select the Manage tab at the bottom of the screen.
Step Three Press to select the large Sources button
Step Four If the ultrasn0w repo is not present press the Edit button at the top right of the screen. Otherwise, skip to Step Nine.
Step Five Press the Add button at the top left of the screen.
Step Seven Once the source has been added press the large Return to Cydia button.
Step Eight Press the Done button at the top right of the screen.
Step Nine Press to select repo666.ultrasn0w.com from the list of user entered sources.
Step Ten Press to select ultrasn0w from the list of packages
Step Eleven Press the Install button at the top right of the screen.
Step Twelve Press the Confirm button at the top right of the screen.
Step Thirteen After installation completes successfully press the large Return to Cydia button.
Step Fourteen Now press the Home button then power off and power on the iPhone. You do this by holding down the power button for 3 seconds then moving the power slider that appears to the right. Press the power button again to turn on the phone.
Step Fifteen You should now be able to insert the SIM of your choice!