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.

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