There's now an even easier method for jailbreaking iPhones running software/firmware 1.1.3 -- if you're on a Mac. Jailbreaking allows read/write access to the filesystem for the installation of unofficial third-party applications.
To use the software, download it, expand it, launch it, connect your iPhone and follow the on-screen instructions. The application also includes an unlock mechanism.
Unlike ZiPhone, however, iJailBreak does not include iPod Touch support.