According to TUAW, Pwnage Tool 2.0 will activate, jailbreak, and unlock first generation iPhones running any firmware up to and including version 2.0. Unfortunately, it will not unlock an iPhone 3G (at least, not yet). iPhone 3G owners can still use the tool for activation and jailbreaking (so you can run 3rd party apps not supported by Apple and the new iPhone App Store).

So far, skimming through the 1322 comments on their announcement post, I’ve not seen any complaints or death threats about the tool bricking iPhones, but one should still proceed with caution. According to one update to the post, some people either get an error 1600 from iTunes or they notice a “failure to prepare x12220000_4_Recovery.ipsw” in the log. They’ve provided a workaround, however. If this happens to you, simply mkdir ~/Library/iTunes/Device Support or alternately nuke all the files in that already extant folder and re-run Pwnage Tool.

UPDATE: Image is from Engadget’s iPhone review we covered earlier.

They have added a lot of new features such as: canned web searches, custom installer configuration, and custom root partitions. They promise to release it soon, but state that it will not be this weekend. You can get a the high resolution version of the video from our mirror.