This complete step by step tutorial will allow you to jailbreak iPod touvh 2nd gen  and iPhone 3g with nay baseband. Also you can unlock iPhone 3g to use with any operator. You must have iTunes 8.2 installed Download here. Download and install iTunes and then follow the instructions. So lets start with the tutorial. You will need some files to start, so download the files first. Please note that not all files are neccessory, only download files according to your device which you want to jailbreak.

Note: Following this procedure will erase all the data on your iPhone or iPod, so make sure you have a back up of your iPod or iPhone before going further.

redsnow .7.1
OS3 for iPhone 3g ( for iPhone 3g only )
OS3 for iPod touch 2g ( for ipod touch 2nd gen only )
OS3 for iPod touch 1g ( for iPod touch 1st gen only )

Step1
Connect your device to your computer and launch iTunes and in the left pane of the iTunes select you device. Under the summary tab in your iTunes, holding down shift button, press restore and select the OS3 file with ipsw extension for your device you just have downloaded. Now its iTunes turn and when it will complete its procedure, your device will have OS3 installed in it.

Note for iPhone owners: After that your iPhone has been updated to OS3 your iPhone will ask you to connect it to computer,and if you are not using the supported carrier then iTunes will refuse to enable the functionality of iPhone untill you insert a supported carrier sim. Do not worry, we will fix it in following minutes.

Step2
Put your ipsw file and redsnow contents in a folder and launch redsnow.

Click on Browse and select the OS3 file of your device, and then redsnow will start to validate the ipsw file.

Click Next and then resnow will prepare for jailbreak data

after preparing you will be moved to the next window like:

Here you have the option to install Icy or not, Install Cydia option is selected by default. It doesnt matter whether you install Icy or not, click Next.

at this point you will have to make sure to turn off your device. Please make sure it is completely off but still is connected to the computer. Now click Next.

Now follow the instructions as you can read from the picture above. Hold down the power button for 2 seconds, then without releasing the power button press the Home button for 10 seconds. Without releasing the Home button, release the power button but keep holding the Home button for 30 seconds. This will enter your device into DFU mode where the real process for jailbreaking will be started. Now you can take a break and let it do its work. You will see on you device screen that the jailbreaking has been started and after sometime your device will be jailbroken.

At this point iPod touch and iPhone 2g owners have got what they want but for the iPhone 3g owners who want to unlock their iPhones keep on reading the tutorial.

Step3:
Now that you have jailbroken your iPhone you can see the Cydia icon on your Home screen, tap it, it will ask for some essential upgrades, you may upgrade if you are curious but it is perfectly safe to upgrade later, ultimately it will open an application like this:

Tap on manage, and you will see screen like:

Tap sources, the button in the middle

Now tap Edit then Add, now enter the URL http://repo666.ultrasn0w.com as shown in the picture, please mak sure that there is zero in ultrasn0w not 'O', else it wont work, now tap Add Source.

Now you will see all the sources added by you, tap on repo666.ultrasn0w.com and you will see like this:

Tap on Ultrasnow, and it will take you to the Ultrasnow page, now tap on Install and then tap on Confirm. It will install Ultrasnow on your iPhone and then it will reboot automatically.

TADA, your iPhone is unlocked and can be used with any carrier. If you are facing any problem please feel free to ask.