The iPhone Dev Team have released Yellowsn0w, a software unlocking solution allowing the iPhone to be used with any SIM on any network.
The phone needs to be Jailbroken first (another software hack allowing 3rd party software to be installed – can be performed using Pwnage 2.0) and then Yellowsn0w is installed and run.
Apple doesn’t support iPhones using 3rd party software and says it invalidates the warranty of the phone, unlocked phones are only legal in Germany and Hong Kong where local regulations mean the phones can not be locked.
However Yellowsn0w does seem to work, even Stephen Fry has successfully installed it and unlocked at least one of his 7 iPhones!!