We did unlock an iPhone 3G successfully with the iPhone Dev Team’s tool yellowsn0w, and here is the guide on how to unlock the iPhone 3G.
Connect your device with the USB port, and QuickPWN will recognize it. Then download the latest 2.2 firmware from here.
If you don’t prefer to download manually, the tool will download the 2.2 firmware for you. But this upgrade is necessary for the Cydia and installer to run.
IPSW is built and then data + firmware is sent from your computer to the apple website. Then it will need you to do a few things with your phone(like holding the center + switch off button for 10 seconds and releasing). With all this done, the jailbreaking is done.
Then you need to install Cydia to iPhone. Through the installer app in your phone, you will see it already there. Install and then select Cydia from the list of apps in your iPhone.
On the bottom of Cydia page, go to Manage.
Then go to the Sources window, and click Edit on the right.
Click on Add and then enter the Cydia/APT URL = http://apt.yellowsn0w.com
Then click on the added URL and you will be taken to the yellowsn0w download window.
It will install yellowsn0w once you confirm that, and then follow the steps below -
Go to Settings > General > Reset > Reset Network Settings
Switch off your iPhone and place the 3rd party SIM into the socket and switch it on. The phone will not recognize the SIM, then go to Settings and Switch On and Off the Airplane mode and wait for a minute.
After this, remove your SIM with the phone On, and re-insert it. Wait for a minute and you will see your network active. Be patient for a minute or two, so that your phone recognizes and establishes connection with your SIM and network.