The ever-determined band at iPhone Dev have updated their "PwnageTool" to include the 3.1.2 release of the iPhone software for iPhone 2G/3G/3GS and iPod Touch 1G/2G (note that the iPod touch 3G is NOT supported).
Jailbreaking, which is different than "unlocking", allows different applications to be run other than the ones available at the App Store, and also allows for some additional functionality such as background process for third party applications. I assume that those who are interested in jailbreaking are already familiar with it enough to know what the 'dangers' are.
For the idly curious, I highly recommend that you check out the webpage and think about whether you really need the functionality it offers. Notably, this will not allow for things like internet tethering on a carrier that doesn't officially support it. The iPhone Dev folks suggest that you remain at 3.0 until a hack for that is developed.
While I haven't followed jailbreaking since the official App Store, I admire the persistence which the group of programmers attacks the closed iPhone system, finding their way in through various flaws that they are able to detect. I don't advocate jailbreaking and I don't dissuage people from it, assuming that they understand the risks. But as someone who knows a little about programming (emphasis on "a little"), I think it's interesting to watch.
This situation has been referred to as a "cat and mouse" game, where each release of the iPhone OS closes whatever hole the iPhone Dev team has used to get in, only to have subsequent holes found. One could even make the argument that the iPhone OS might be better off because of the iPhone Dev folks who work hard to discover these flaws which might otherwise go unreported. Do I ever imagine a day when the game ends? No. As long as there are restrictions on the iPhone, there will be people who look for a way around them. Apple could open up background processing for third party applications and approve every application submitting to the App Store and there would still be those who would want something else: full local access to the filesystem, for example.
Fortunately for me, I don't have any pressing "need" for jailbreaking. I wish that I could have access to the Google Voice applications which were yanked from the App Store, but overall I'm fairly content with what Apple offers. But for those who want more, the iPhone Dev team has spent a lot of hours to make this available. Happy jailbreaking.