How To Upgrade to iPhone OS 3.0 on your Unlocked iPhone

The iPhone 3.0 Software is releasing on June 17th. Thats not too far but the firmware is already out on the interwebs. This guide is meant only for folks who are comfortable hacking their iphones.

We tested this guide on a iPhone 2G which was running version 2.1 firmware. Now its running version 3.0 and still remains unlocked. We had some issues with the upgrade and the phone got bricked a couple of times.
Here is how you do it. Please note that, you should proceed with this only if you are ok with screwing around with your pricey iPhone. I do not take the responsibility if your phone screws your happiness.

Steps for Upgrading: 

Backup your iPhone using iTunes first . Would be useful just in case you wish to restore data.

This process will format your phone memory . Make sure to save all important stuff and make a not of apps installed.

You will need a Pwned version of the iPhone firmware before you restore to the 3.0 firmware.

Get iTunes 8.2 . Previous versions wont work ! Grab the Pwned version of the 2.2.1 software here as long as it lasts ! If you are already on 2.2.1 with a Pwned phone , you can skip this step.

Its a 250MB file approx.

Open itunes and connect your phone in DFU mode - just hold both home and power button when booting up

Inside itunes, after the phone is connected, lookout of the RESTORE button, don't click it

Use Shift + RESTORE and look out for the firmware file you downloaded before.

Restore should begin and should take some time

Your iphone will be restored to iPhone 2.2.1 and should still remain activated.

Now connect the phone again and now you should see UPDATE Button

Don't click on UPDATE , click SHIFT +UPDATE you will be prompted for a file - Grab the iPhone 3.0 Firmware - ~250 MB if all goes well , you should have iPhone 3.0 and your phone should remain unlocked ! 

source: www.fonearena.com