iPhone Jailbreak?

I'm kind of confused what jailbreak means? Does it mean that you're going to hack your phone?

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In a word, yes. Jailbreaking your iPhone is the process of over-riding Apple's software lockdown on an iPhone or iPod Touch. This allows you to download/install apps that Apple doesn't approve of, among other things. Apple has a minor hemhorhoid over this. They say it's a copyright violation, and voids your warranty on the device. I say that's crap. Apple's always been too nanny-minded with their stuff. And you can easily reverse the jailbreak simply by restoring your device in iTunes.

Here's a link to a good basic article on jailbreaking, courtesy of Wikipedia. Note that there's not currently a jailbreak available for OS 3.1.3 on the iPhone. You'll need to jailbreak it in 3.1.2 or earlier, then upgrade.