Just a week after Apple released the iPhone 3.1.3 update, Sherif Hashim has discovered an exploit that could allow iPhone users to unlock their iPhone on the iPhone 3.1.3 firmware on baseband 05.12.01 and use it with other carriers like T-Mobile in the US, for example. We get these a lot, but no the iPhone can't be unlocked to work with Verizon because Verizon operates on a CDMA network. Apple always updates the baseband with each update, causing many iPhone users to loose their unlock so this is good news for the iPhone users that had their baseband updated and lost their unlock.
For now, download iPhone toolbar (works on Windows/Mac on Firefox, Safari, or Internet Explorer browser) and you'll receive an alert once the unlock is released, and instructions on how to install it.
The exploit Sherif Hashim uses has not been revealed yet, but iPhone Dev Team member MuscleNerd has confirmed that it works. The iPhone Dev Team will most likely wait for Apple to release the next generation iPhone 4G before releasing this unlock so that Apple does not patch the exploit before then. For now, all iPhone users that are unlocked/jailbroken are advised to be extremely cautious of future firmware updates and avoid updating before the jailbreak tools are updated.