The iPhone cracker group iPhone Dev Team have made a significant progress in hacking into Apple iPhone 3G baseband required for unlocking of iPhone 3G, the group posted pictures and videos demonstrating their success, Apple iPhone earlier version can be jailbroken and unlocked using group's PwNage utility.
Video Demonstrating iPhone 3G BaseBand Hack
However, users awaiting eagerly for the final working iPhone 3G unlocker should not get too much excited, The official group post stated:
Running modified baseband code is a very useful ability, but it’s still not possible to accurately estimate how close we are to the ultimate goal.
Source : http://www.megaleecher.net/Unlocking_iPhone_3G