Update: Blacksn0w Unlock (05.11.07 Baseband) and Blackra1n Jailbreak for iPhone How-to Guide (RC3) all steps are the same, the only thing is you will be able to unlock your phone if you upgraded to baseband 05.11.07
We are working on community created guide on how to use ultrasn0w.
If you like to help join chat room: http://tinychat.com/ultrasn0w
1. iPhone 3.0 firmware
2. iPhone 3G or 3GS
Open Cydia and click Manage, then Click Sources, then Edit (right top corner),
Click Add (Left top corner)
Enter unltrasn0w repository http://repo666.ultrasn0w.com
Click Search and search for ultrasn0w. It will show-up in your results since you add ultrasn0w repo.
Click on the search results and you will get to package installation.
Click Install (right top corner), Click Confirm (right top corner)
Ultrasn0w is installed.
Reboot your iPhone: Hold Power Button until you get "slide to power off"
Turn your iPhone off and then back on.
TMOBILE users, make sure to disable 3G before using ultrasn0w.
Help us create/verify community guide, join us at http://tinychat.com/ultrasn0w