iH8Sn0w has just released the updated version of Sn0wbreeze – Sn0wBreeze v1.7. Sn0wBreeze v1.7 for Windows can be used to jailbreak iPhone 3GS (old and new bootrom), iPhone 3G, iPod touch 2G (MC and non-MC) and iPod touch 3G. Though Sn0wbreeze can jailbreak most of the iDevices, if you are a iPhone 3GS (new bootrom), iPod touch 3G or iPod touch 2G (MC model) user then you will have to be either on the 3.1.2 firmware or you will need to have the SHSH blobs saved for iOS 3.1.2 to jailbreak these iDevices on iOS 4. You also need to note that the sn0wbreeze jailbreak for iPhone 3GS (new bootrom), iPod touch 3G and iPod touch 2G (MC model) on iOS 4 will be tethered. So whenever you turn off your iPhone/iPod Touch, you have to re-connect it to a computer to run it again.

iDevices Supported By Sn0wBreeze v1.7

• iPhone 3GS (Old BootRom + support for Spirit Jailbroken devices)
• iPhone 3G and 2G
• iPod Touch 3G only if they are running firmware 3.1.2 or you’ve SHSH blobs for 3.1.2
• iPod Touch 2G (non-MC) and 1G

Complete jailbreak tools might be released very soon after Apple releases the iOS 4.1/4.0.1

The jailbreak process is similar to the one mentioned with sn0wbreeze 1.6. Follow the below jailbreak guides that are specific to your device.

Jailbreak iPhone 3GS and iPhone 3G on iOS 4 with Sn0wBreeze 1.6
Guide To Jailbreak iPod Touch 2G on iOS 4 Firmware Using Sn0wbreeze 1.6.1

Alternatively you can look for PwnageTool Guides Below

How To Jailbreak iPhone 3Gs iOS 4 With PwnageTool 4 Without Baseband Upgrade
Jailbreak iOS 4 Firmware on iPhone and iPod Touch With PwnageTool 4.01

Once you are done with jailbreak, you can unlock your iPhone by reading ultrasn0w guides below.

Procedure To Unlock iPhone 3GS on iOS 4 With 05.13.04 Baseband Using UltraSn0w 0.93
How to Unlock iPhone 05.12.01 Baseband on 3.1.3 Firmware With UltraSn0w 0.93
How To Unlock iPhone on iOS 4 With 05.13.04 Baseband Using UltraSn0w 0.93