If your 3G iPhone is on a regular contract and you always plan to be with the carrier then you can update but you will lose the jailbreak and access to third party (non AppStore) applications.

Both Mac OSX and Windows versions of ZiPhone are available and can be downloaded here. According to the ZiPhone instructions, jailbreaking with the utility is as easy as connecting your iPhone to its dock and running ZiPhone (users with no IMEI, no WiFi, and/or no baseband may have to boot the phone in restore mode and run ZiPhone with the '-u' option). After that, just follow the on screen instructions.

We haven't tested ZiPhone first hand yet, so we can't speak personally to the results. Though some users are experiencing problems, many are reporting successfully jailbroken iPhones after using ZiPhone. More information is available on Zibri's blog and supposedly the source will be released on the iPhone Elite Team's page later today.

Stay tuned for more information regarding ZiPhone.

But, don't get excited. If you're one of the many iPhone owners who upgraded to 1.1.3 hoping to give it a shot and go back to your third party apps under 1.1.1 or 1.1.2, only to find out that you could not downgrade from 1.1.3 - you're remaining stuck, at least for the time being.

There are a couple road blocks between you and this 1.1.3 jailbreak. They are both deal breakers. First off, word is that the jailbreak requires a hardware modification to the iPhone. This means that unless you a) really know what you are doing or b) are crazy, you won't be attempting the hardware mod. Secondly, indications are that the team who put the jailbreak together has no plans to release it - at least not until Apple releases the SDK in late February.

The great iPhone rumor mill does have some rumblings that the teams behind this initial jailbreak are working on an alternative jailbreak which they will actually release to the public. However, this tidbit, along with much about this jailbreak - is less than rock solid.

As expected, the 1.1.2 firmware fixes the TIFF exploit (which was the blessing that allowed hackers to jailbreak the 1.1.1 firmware) and adds support for many languages. As a result of the TIFF exploit fix, it comes as no surprise that jailbreak methods such as AppSnapp (jailbreakme.com) no longer work. If you want to keep a customized iPhone with 3rd party software, custom ringtones, etc - stick with 1.1.1, at least for the time being.

For those of you who still haven't gotten around to upgrading to 1.1.1 from 1.0.2 and are looking to avoid 1.1.2 for the time being, now is the easiest time to do it. If you don't need to restore your iPhone before upgrading (you haven't modified, jailbroken, or otherwised customized your iPhone), you should have an easy upgrade to 1.1.1 at this time using the iTunes feature. This will change as soon as iTunes starts showing 1.1.2 as the update firmware version, however.

Once this happens, or if you have modified your iPhone, you'll have to force your firmware version when updating or restoring your iPhone. Follow the instructions at the preceeding link, it's quite painless to force the firmware version through iTunes. Just make sure you select the 1.1.1 firmware from your local harddrive when doing so.