You can now jailbreak your iPhone 3G running iOS 4 using RedSn0w. This version of RedSn0w will only jailbreak the iPhone 3G and iPod Touch 2G.
At the time being the only way to jailbreak the iPhone 3GS on iOS 4 is to use PwnageTool. RedSn0w should be updated soon to jailbreak both the iPhone 3Gs and iPhone 4, so be patient.
According to the Dev Team, “For now, the redsn0w beta release supports only the iPhone3G and iPod Touch 2G at today’s 4.0. It’s still a beta, so you’ll need to let Cydia reorganize, reload, and update after using redsn0w.”
This being said jailbreaking the iPhone 3G iOS 4 with RedSn0w is fairly simple.These instructions are to jailbreak the iPhone 3G iOS 4 using RedSn0w. Instructions are the same to jailbreak the iPod Touch 2G.
How to Jailbreak iPhone 3G iOS 4
Step 1: Make sure you have the latest version of iTunes installed (iTunes 9.2).
Step 2: Download iOS 4 for iPhone 3G to your desktop from our iPhone downloads section.
Step 3: Update your iPhone to iOS 4 via iTunes.
Step 4: Download the latest version of RedSn0w from here.
Step 5: Point RedSn0w to the iOS 4 you downloaded in step 2.
Step 6: Select “Install Cydia”.
Step 7: Follow the onscreen instructions.
Step 8: Let RedSn0w do the hard work for you. Once jailbroken, your iPhone will reboot.
Now as mentioned above, this is just a beta release of RedSn0w, which means you might have a few issues. One of the most common issues is that the Cydia icon appears all white. In order to fix this, simply add the following repo to Cydia and reboot your iPhone: http://apt.saurik.com/cydia-3.7.