This is for legit ATT Customers (ie. those who have a 3g iphone plan on their account). This will only jailbreak your phone and add Cydia, which currently has limited applications.
1. First, download and install the latest 2.0 firmware from
HERE
2. Then download the latest version of Winpwn (currently 2.0.0.2) from
HERE
3. Install Winpwn and open it up (windows vista users may have to right click on the Winpwn icon and select "Run as administrator").
4. When Winpwn opens, click on "Browse .ipsw" and navigate to the ipsw file you downloaded in step 1.
The following text should be displayed:
7/25/2008 12:37:58 AM - File from:C

Users\Wildcat\Desktop\iphone\iPhone1,2_2.0 _5A347_Restore.ipsw
7/25/2008 12:37:58 AM - Recognized as:iPhone1,2_2.0_5A347_Restore.ipsw Type: IPSW_iPhone3G
7/25/2008 12:37:58 AM - Be sure to connect an iPhone 3G!
5. Then click on "IPSW BUILDER".
Applications Tab: Check only "Install Cydia"
Custom Images Tab: Optional to change the boot images
Custom Payload: Do not touch
Advanced: Uncheck all boxes, including activate phone
VERY IMPORTANT: If you are a legit ATT Customer and do not uncheck activate phone you may not pick up service after you jailbreak your iphone and install the custom firmware.
6. Then hit "Build .ipsw" and let Winpwn do its thing. This may take a while and your computer may seem like it is frozen, let it run and try not to run any other applications.
7. With iTunes open, click iPwner in the main Winpwn window. You may get an error message saying pwning failed. If this happens, iTunes will have closed. Just hit iPwner again with iTunes closed and you should get a message in a few moments saying "iTunes Pwned".
8. Now boot your phone in DFU mode by first holding down the home and power buttons for around 9 seconds (you will see the slide to unlock button pop up, keep holding, the phone will shut off). About two seconds after the phone shuts off, let go of the power button but continue to hold the home button. Make sure your computer's sound is on because several seconds later you will hear iTunes recognize your phone, then you can let go of the home button. iTunes shoudl tell you that your phone must be recovered, which is what we wanted.
9. Now hold down the shift key and click on the "restore" button in iTunes. Browse to your custom firmware (.ipsw file you created earlier) and let iTunes restore your phone.
When it is all done you should have Cydia installed and that means you are jailbroken.
Any questions or clarifications needed let me know. I made this specifically for ATT 3g customers because the Winpwn thread got long and confusing and it took me a while to figure out.