For the last six months, the Dev Team have been working on an iPhone 3G baseband unlock. Things have moved so slowly that despite the teasing little trickles promising progress, it looked like the Dev Team might have been totally locked out by Apple.
But Merry Christmas! They've done it. There's some caveats: you need a baseband of 2.11.07 or earlier. If you upgraded your iPhone 3G too far, you're out. But if you followed the Dev Team's advice and avoided upgrading your iPhone 3G until the unlock became available, you're in.
The Dev Team promises to release it on New Year's Eve.
yellowsn0w live demo [Dev Team]