Update: This tutorial is for 3.0 firmware, if you have a new phone or iPod check out these links:
http://www.cultofmac.com/how-to-jailbreak-and-unlock-your-iphone-ipod-touch-using-blackra1n/20356
http://www.redmondpie.com/appsync-for-iphone-3.1.2-jailbreak-firmware-ikp7989/
Let's get started
The software which you can find here:
will jailbrake your iPhone and allows you to install Cydia which is the alternative to AppStore but with a kinda different types of iPhone applications (You need to close down iTunes and connect your iPhone to the computer otherwise the iTunes will be connected to the phone and purplera1n will be unable to connect to the iPhone). Once you'll have the application, connect the phone, make sure that iTunes is not running, run the purplera1n app and click on "make it rain button" and wait for a few minutes. During the jaibraking process your phone will restart, you'll se the picture from http://purplera1n.com/ and once restarted you can disconnect the iPhone
Once your iPhone is Jailbroken, go to your iPhone and look for an application with white icon called "Freeze". Make sue that you are connected to the wi-fi as I had some problems with installing Cydia while I was connected via 3GS. I suggest to touch the iPhone display every 10 seconds to avoid the phone going to the sleep mode, it happend to me twice and download of Cydia had been interrupted.
Once Cydia is installed, run it (Run it as a hacker as I am not sure if all the necessary packages we'll need are in the User mode), install all suggested updates (recommended) and click on "Manage" button on the bottom of the application, than click on "Sources", click on "Edit" button on the top, than Add http://cydia.hackulo.us/ and http://repo666.ultrasn0w.com/
Once you have those two repositories installed, you can actually search for the applications you need to unlock your iPhone and a hack which allows you to install any application straight from the iTunes.
Click on Search and search for ultrasn0w and install it ... and your phone will be unlocked than search for AppSync and install it as well, this will allow you to install cracked apps trough iTunes
Than you might want to search for SBSettings to disable the Freeze icon and have an access to a cool settings pannel :-)
Check screenshots from my Cydia on the right to see how does it work
If you want to download some applications or games just go to PirateBay or MiniNova and use MicroTorrent (Windows) or Transmissiom (Mac) to download anything you need.
Of course please do not download any illegal stuff ... because it is illegal and that's not right.
And that's all folks ... now you can use any sim card, install any app you want.
Just be careful if you don't have free internet connection, I suggest to disable the 3G to avoid surprisingly high bills :-)
Video tutorials how to unlock and jailbrake your iPhone:
Windows:



Ondrej
from 87.194.**.** @I will add images to the text soon :)
BentleyFrancisca
from 193.41.**.** @Buildings are not cheap and not everyone is able to buy it. But, business loans are invented to aid different people in such kind of situations.