UPDATE: This post is now obsolete – see this one for the simple, easy method.
I haven’t tried it yet but the iPhone forums seem to be abuzz with people successfully upgrading their iPhones to the latest firmware (1.1.3) and software unlocks still working. Thanks to Nate True, there is a software jailbreak method now available for 1.1.3.
Detailed instructions for Mac users (the title tag is wrong) and for PC users.
Nate’s site has the instructions but this one has screenshots of the entire process so that should be more reassuring….although don’t blame me if you’re left with a nice Apple branded paper weight when you’re done – make sure you READ EVERYTHING before you do it as there are some issues with certain versions of iPhones (baseband and unlock method) – you’ve been warned!
I’ll probably try it out this weekend and will post back here when I’m done.
UPDATE: Nate has posted a FAQ for helping those that have attempted the jailbreak and run into problems. You should avoid this method if you have a PowerPC Mac as well.