The iPhone Dev Team appear to be very close to unlocking the iPhone 3G, allowing for use on networks other than AT&T. The group has been able to break into the baseband processor, a step that allows them full access to the core of the system. With this task completed, it sounds as if it's no longer a matter of if, but when an iPhone 3G unlock will be released. The video below was released by the iPhone Dev Team and shows a custom app running on the baseband.

3G Baseband Tool from iphonedev on Vimeo.

via Gizmodo