In a video up on the Finding Jtab on the iPhone blog, a shaggy-haired young hacker holds up an iPhone and proclaims "This is the world's first unlocked iPhone."
By unlocked, he means he's gotten around having to use the iPhone with AT&T. In the video, he holds the phone up to the camera to show the T-Mobile connection indicator on the screen, makes a phone call, and then removes a T-Mobile SIM card.
He says he and his team had to take the phone apart and perform some complicated soldering, but they hope to have a software unlock figured out when they post details of their hardware unlock in a week.
Ars Technica also has a blog post up with a few guesses about how the team pulled it off.