How to Jailbreak

Disclaimer : You are doing this on your own risk, i take no blame if you brick or spoil your iPhone

Note: This can Jailbreak and unlock (iPhone 2G and iPhone 3G) (not iPhone 3G S)
This can Jailbreak (iPod first and second gen)

FAQ : Will my stuff ( apps , contacts , SMS , music , video , etc) still be intact?
ANS : YES


Step By Step
1) Launch iTunes 8.2 and update to the latest firmware version 3.0

2) Download Redsn0w package for your computer
http://theiphoneproject.org/windows/redsn0w-win_0.7.2.zip Windows
http://bentkowski.com.pl/redsn0w-mac_0.7.2.zip Mac

#) Only if using iPhone 2g download bootloader packages 39_46 and place them in the same folder where Redsn0w resides

3)Launch Redsn0w

4)Open My computer , Click tools > Folder Options > View Tab > Select "Show Hidden files and folder"

5)Click Browse (Redsn0w)

6)Look for the Update file
Should be in here
C:\Documents and Settings\Username\Application Data\Apple Computer\iTunes\iPhone Software Updates\ Windows
/Users/Username/Library/iTunes/iPhone Software Updates/ Mac
Select the file that is latest in "Date Modifidy"

7) Click Next
Tick Cydia (Do Not Tick Icy)

8) Click Next

9)Make sure your iPhone / iPod Touch is turned off and is connected to your computer

10)Click Next

11)Follow the Steps given to set it to DFU mode
If the stesp are too fast do not worry , click the back button and next button to repeat the procedure
If you did it wrongly and went to recovery mode or other mode , do not worry off the phone and repeat the steps given again

12) After you complete your DFU mode , just let it run for about 7 minutes.
After your iPhone restart.
It would be jailbroken!

Have fun!