The latest craze with iPhone lovers is the v1.1.3 update that's making techies' brain cells pop with the kind of features it's brought to the device. Of course, hackers would no doubt make it their life's ambition to crack this version too... and what do you know, they have!
If you're an iPhone noob, 'Jailbreaking' involves cracking the iPhone so that it will allows users to install third party applications that are not official. It allows full read/write access to the file system of the iPhone, which opens it up to manipulation for various purposes (and not just running third party apps).
You can take a look at the hacking via the YouTube video these guys have so graciously put up. Most of the other iPhone sites seem to have lost the video altogether.