Jailbreak iOS 4 on iPhone 3GS, iPhone 3G, and iPod Touch 2G with PwnageTool 4.01
The iPhone Dev team has just updated their PwnageTool to a version 4.01. It is now capable of jail breaking iPhone 3GS, iPhone 3G, and iPod touch 2G. It brings fixes for iBooks and some issues discovered in PwnageTool 4.0.
Here is a detailed guide on how to jail break using PwnageTool 4.01