Here are the step by step instructions from the link Travenger provided before. I have tried the steps below.... IT TAKES A LOOOONG TIME so make sure you don't have to work the next day!

Warning!!! The following steps are for your reference only; it is possible that you may break your iPhone using this tutorial. YOU ARE WARNED. (The following steps are from the hard work of George Hotz; who’s recently been seen on CNN).

Okay onwards to the actual step. Remove the black part, the three screws, and the aluminum case. Disconnect the wire connecting the phone to the case. Do not remove anything else. (Click on the pictures ON THE BOTTOM OF POST to see the enlarged photo)

STEP 2: Remove the metal cover over the comm board. This is all the disassembly you have to do. If you feel like being safe, desolder the battery red lead. Not necessary.

STEP 3: The red line is covering the A17 trace. In order to trick the chip into thinking the flash is erased in the correct section, you will need to pull this high. Scrape away at the trace with something like a multimeter probe. Then solder a very thin wire to it. Be very careful. Only scrape away at that solder mask above that one trace. YOU DO NOT WANT TO BREAK THE TRACE. This is the hardest step in the whole process; the rest is cake. Also solder a wire to the 1.8v line. Connect to wire coming from the trace and the wire coming from the 1.8v to your unlock switch. Be careful, you only get one chance to do this right.

STEP 3(completed): Hopefully yours will look like this.

STEP 3(zoom-in): This is the zoomed in of the previous photo

STEP 4: Ok, time to test what you just soldered. First use the continuity check on a multimeter to make sure the wires aren’t shorting to ground or to each other. Make sure your switch is in the off position. Power up your iPhone. Hopefully it didn’t smoke Now go into minicom to tty.baseband and send a few commands, AT a few times will do. It should respond OK. Now flip your switch, the baseband should stop responding. Even when you flip it back, the baseband still shouldn’t respond. Be sure your switch is off, then open another ssh and run “bbupdater -v” You can get bbupdater off the ramdisk. This should reset the baseband, and minicom should start working again. If it did this, your soldering is most likely good, and you are ready to actually start unlocking your phone!!!

STEP 5: If it passed the checks in step 4, congratulate yourself. You are a pro solderer. Go eat lunch. If not, don’t worry yet. I must’ve thought I bricked my phone 100 times. First of all, to power up your phone you don’t need to reconnect the case with the power button. Just connect it with USB, it’ll power itself up. Secondly, don’t waste time compiling minicom. Download the binary here, and termcap here.

(IF YOU CAN NOT DOWNLOAD THE FILES FROM HERE; Then check out thegadgetlink.com/blog/?s=iphone+instructions to download these files)

STEP 6: Now, with the switch taken off, your baseband should be working perfectly. Here you should take a NOR dump of your phone. The dev team’s NORDumper is a great way to do this. This is good to have in case something goes wrong. You can extract the firmware from this as well, which we’ll get to later.

STEP 7: So here is the first tool release, iEraser. This erases the current firmware on your modem. Don’t worry, you can always put it back with bbupdater. Here how the bootrom check works; it reads from 0xA0000030 0xA000A5A0 0xA0015C58 0xA0017370 and all these addresses must read as blank, or 0xFFFFFFFF. When you erase flash, it becoms 0xFFFFFFFF. But you can’t erase those locations, because they are in the bootloader. So thats where the testpoint comes in. Pulling A17 high hardware OR’s the address bus with 0×00040000(offset one because data bus is 16 bit) So the bootrom instead checks locations 0xA0040030 0xA004A5A0 0xA0045C58 0xA0047370, which are in the main firmware and can be erased. Pretty genius
To use this tool, you need the secpack from your modems version. The erase of this section is protected. Check the modem version in Settings->About. It’ll either be 3.12(1.0) or 3.14(1.0.1 and 1.0.2). You need the ramdisk which cooresponds to your version. Then go into “/usr/local/standalone/firmware” and get the ICE*.fls file. Extract 0×1a4-0×9a4 and save it in a file called secpack and place it in the same directory as the ieraser tool. Run ieraser. This should erase the modem firmware and leave you one more step on your way to unlocking.

STEP 8: Now its time to patch the firmware. Thanks to gray for finding these patches, this required some very complicated reversing. First, you need to extract the firmware from your nor dump. The range you need is 0×20000-0×304000. Save this file as “nor”. The patches you need to apply are as follows. These are offsets from the begininning of the file to saved as “nor”. Choose your version, and patch.
3.12: (213740): 04 00 a0 e1 -> 00 00 a0 e3
3.14: (215148): 04 00 a0 e1 -> 00 00 a0 e3
Resave the file nor, you’ll need it soon…

STEP 9: The final tool is iUnlocker. This tool uploads a small program, “testcode.bb”, to the baseband using the bootrom exploit. This program needs to be in a dir with “nor”, the file you obtained in the last step. You need to have the switch on when running this program. This will download and run the code in “testcode.bb” Then the program will stop and ask to to turn off the switch. Do so. You type any character then hit enter. The nor download starts right away. When the counter reaches 0×2E4000, it is done. Run “bbupdater -v”. Hopefully it will return the xgendata. If is does, the nor upload was successful.

STEP 10 (FINAL STEP!!) minicom into /dev/tty.baseband. If you already used up your attempt counter, the phone should already be unlocked. If not just run ‘AT+CLCK=”PN”,0,”00000000″. That will unlock the phone for sure. Run ‘AT+CLCK=”PN”,2′. It should finally return 0!!!
Your phone is now unlocked. Exit minicom and copy the CommCenter plist back to its place. Reboot. iASign. And enjoy your unlocked iPhone.

Hi Tavenger,

It has already happened, i run the site Unlock That iPhone. We are providing Unlocked 8GB iPhones anywhere in the world for 449euros or a single iPhone unlock for just 39euro ($49) We are using iphonesimfree.com's unlocking software to do the unlocks. We made our payment today so we sould recieve our unlock software early next week!! Our site is currently pre-ordering as we are only getting 50 unlocks at first!!

As an avid iPhone fan i was delighted to hear from iphonesimfree that the unlock is now ready and just awaiting payment, i've been dying to use it here in Ireland!!

For people who wanna unlock an iPhone they alradey have, the iPhone must be activated and must be jailbreaked as a .app file must be transfered to the iPhone. Unless you have a MAC, jailbreaking is very very difficult to do so thats why we are also providing already unlocked phones.

They must then purchase a Unlock form a iphonesimfree Reseller adn submit details about the iPhone (serial, imei etc). these details are used to validate the unlock later on. The reseller then inputs these details into his iphonesimfree account. When this is done, an e-mail will be sent to the buyer with a download link to the .app file.

Once the .app file is transfered to the iPhone, the user will start the application, it will then connect to iphonesimfrees server via wifi, check the details that where submitted earlier, and then procedd to unlock your phone. The whole process takes about 5 minutes.

This happened a couple days ago. I'm kinda late

Finding JTAG on the iPhone

YouTube - Unlocked iPhone