- PhoneBook SIM card
- Wi-Fi and Internet connectivity
If after you insert a SIM card you get locked into a 'Connect to iTunes' screen, then your iPhone is locked to a particular carrier and you need to activate the phone before you are even able to access the main menu.
This can be done by using a PhoneBook SIM (which you can purchase from eBay for less than $10). This is essentially a blank SIM and is able to activate any iPhone and get past the locked emergency screen.
Once inside the main menu go to settings and switch on the following options:
Jailbreaking is the process which allows a user to install any application on iPhone - including the ones not approved by Apple, such as that application which we'll use later on to unlock the iPhone.
To jailbreak simply open the iPhone Safari browser and visit jailbreakme.com. Just follow the onscreen instructions and the entire jailbreaking process should complete in less than 15 minutes after which you need to reboot the iPhone. This process will also install an application called Cydia which is used to retrieve and install applications not approved by Apple.
Open up the Cydia application and select Manage-->Sources-->Edit-->Add and add the following repository: repo666.ultrasnow.com
This is the server hosting the unlocking program ultrasn0w. Let Cydia do the magic for you and install ultrasn0w.
Now you are able to use any SIM card and install any application on iPhone 3GS 4.0.1.
Update: Some users have reported that there are some types of SIM cards which are not unlocked by ultrasn0w using the above steps, resulting in the following error message - 'Different SIM Detected' after they swap the PhoneBook SIM with their carrier one.