This tutorial is now outdated. As of today Aug. 21, 2010, the best solution for jailbreaking is www.jailbreakme.com/
This guide is for Windows only.
At this time, with redsn0w its possible to Jailbreak (Unlock and Activate) original iPhone (2G) and iPod Touch (1G and 2G as well) and iPhone 3G (partialy).
Your iPhone must be unlocked (from factory settings ) or you are restricted to use it with your official carrier only. You cannot apply Unlock at this time.
Full iPhone 3G support will come later with ultrasn0w (which will be installed via Cydia or Icy)
The free iPhone OS 3.0 Software Update includes some great new features, as well as all the features from previous updates. iPhone OS 3.0 also lets you run the next generation of iPhone apps, like peer-to-peer games1 and more. If you've never updated before, now is the perfect time.
iPhone OS 3.0 software update from:
Only from there,never download from unofficial links!
Go to Installation Instructions.
next go to Jailbreak and Unlock process.
After following these steps, your iPhone will reboot completly unlocked, activated and jailbroken (iPod touch too)
The steps below show you how to add AppSync for OS 3.0.
Since the original miPatch and MobileInstallation does not work, this is the only way to patch your device to make it possible to sync cracked apps from App Store.
Do not install them coz they wont work! Only AppSync will.
full credits to the original creator of this tutorial.