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Jailbreaking is a must-do for most advanced iPhone or iPod Touch users, it enables you to do so much more with your phone like installing custom applications, custom themes and so on.
Blackra1n (or Blackrain) is available since November 2009 on Windows and Mac, its latest version RC3 includes blacksn0w which can be used to unlock iPod and iPhones using 05.11.07 baseband.
Here are the instructions on how to apply this hack:
1. Download the latest iTunes release: http://www.apple.com/itunes/download/
2. Using iTunes upgrade or restore your iPod or iPhone to firmware 3.1.2. I suggest to google iPod or iPhone 3.1.2 firmware and you will find tons of download links.
3. Download blackra1n here: http://blackra1n.com/
4. Connect your iPhone or iPod Touch to your computer and launch the blackra1n application.
5. Press the 'make it ra1n' button to start the jailbreaking process.
6. Once blackra1n did its magic your device is going to automatically reboot. It is now jailbroken!
7. When your device is back up you will notice a new blackra1n application on your Home screen. Select it.
8. Choose an installer like Cydia and blackra1n will download and install the packages.
9. Once done, reboot your device and enjoy your jailbroken iPhone or iPod Touch!
Here is a video which summarizes the different steps you have to go through:
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