Cydia is an iPhone app created by Saurik. It allows you to download iPhone apps that are not officially available in the Apple App Store. If you recently performed a jailbreak, follow the Cydia guide below.
1. Jailbreak you iPhone or jailbreak your iPod touch using blackra1n first. After installing Cydia through blackra1n, you should see the above Cydia icon on your homescreen. Tap the Cydia icon to launch it.
2. When Cydia first launches it will ask you to choose what mode you want to use. Just tap User (Graphical Only). You can go back and change this later if you wish to.
3. Cydia will now check for updates and present you with the above prompt saying something like 2 Essential Upgrades. Tap the "Upgrade Essential" button.
4. Now Cydia will ask you to confirm your selection. Tap the Confirm button in the top right.
5. Cydia will now start updating. Once the update is complete it will show a "Complete" message. You will need to restart Cydia, tap the Close Cydia (Restart) button.
That's it, now Cydia is installed on your iPhone or iPod touch!