Gizmodo reports that the iPhone Dev Teams has unlocked the iPhone 3G and are planning to release the software on December 31st.

While it took a little longer than the free iPhone EDGE unlock, it does sound like this is the real deal. The team is claiming a successful unlocknow the next step is to package it up in a user-friendly GUI app like Pwnage Tool.

"Unlocking" is the process by which customers can break the SIM-lock that ties the iPhone to one specific carrier. There are a number of caveats to the hack so interested readers should see the Dev Team blog.

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