Earlier we discussed how to jailbreak iPhone 3G on iOS 4.0 and now this article discusses how to jailbreak the latest iOS 
Jailbreak iPhone 3G / iPod touch on iOS 4.0.1
1. Upgrade via iTunes
First of all, upgrade your iPhone / iPod to latest 4.0.1 firmware (make sure latest is still 4.0.1 or else this tutorial is void)
2. Download Redsn0w 0.9.5 beta 5
Download Redsn0w 0.9.5 beta 5 build 5 for windows (link not working: http://sites.google.com/a/iphone-dev.com/files/home/redsn0w_win_0.9.5b5-5.zip ) | Mac OS (link not working: http://sites.google.com/a/iphone-dev.com/files/home/redsn0w_mac_0.9.5b5-5.zip )
3. Download iOS 4.0 firmware
Yes, you read it right, you need to download the iOS 4.0 firmware depending upon your device (iPhone 3G, iPod touch) from the links here.
4. Use redsn0w to jailbreak your iPhone / iPod
Turn off your iPhone / iPod and connect it with the computer usb port using connecting wire. Run redsn0w 0.9.5 beta 5 and browse the iOS 4.0 (not the iOS 4.0.1) and continue with the instructions on redsn0w application. For speed issues with iPhone 3G, it’s my personal advice to avoid enabling multitasking and home wallpaper.
It will successfully jailbreak your iPhone 3G / iPod touch on iOS 4.0.1
Click here if you want to unlock your iPhone 3G