Sn0wbreeze 1.8 has been released. This is by the  same 
developer who is behind other popular iPhone 
jailbreak tools such as 
sn0wbreeze 1.6 and 
1.7 for 
iOS 4, 
sn0wbreeze for iPhone 3.1.3, 
f0recast and 
BlackBreeze. Just like the 
PwnageTool for 
Mac, 
 Sn0wbreeze 1.8 can 
jailbreak iPhone 3GS (old 
bootrom, and already 
pwned  on 
iOS 4.x), 
iPod touch 2G (non MC model) and iPod touch 3G on iOS 4.1  Beta. 
iPhone 3G users will have to 
jailbreak using 
Redsn0w, guide for which is 
posted here.

So if you have a Windows machine, you can use Sn0wbreeze 1.8 to  create custom firmware files without the upgraded baseband. Again, only  the following devices are supported.
 - iPhone 3GS (old bootrom and already jailbroken on iOS 4.x) 
- iPod touch 2G (non MC model) 
- iPod touch 3G 
Warning: If you rely on an unlock, DO NOT update to iOS 4.1.
 Instructions are as follows.
 Step 1: Download and install the latest version of iTunes.
 Step 2: Now start iTunes and sync your iPhone with  your PC so that it backs-up all your important data including settings,  apps, music, contacts and photos.
 Step 3: Download Sn0wbreeze and the original iOS 4.1  firmware file for your version of iPhone or iPod touch. Move all these  files to your desktop.
 Step 4: Start Sn0wbreeze and select “Simple Mode”.

Step 5: Sn0wbreeze will now ask you to browse for your  .ipsw file. Select the correct iOS 4.1 firmware .ipsw file by clicking  the “Browse” button. Sn0wbreeze will verify the selected file and then  will present you with following screen.

Step 6: Click on "Yes" when Sn0wbreeze asks you “Do you  want to activate your iPhone?” for hacktivation. Click on “No” only if  you are on an officially supported carrier like AT&T.

Step 7: Sn0wbreeze will now create the custom .ipsw  file for your iPhone which will be jailbroken.


Step 8: Now you will have to restore your  iPhone to this custom firmware 4.1 that you just cooked using  Sn0wbreeze for your iPhone. Click on your phone from the sidebar in  iTunes and then press and hold left “Shift” button on the keyboard and  then click on “Restore” (Not “Update” or “Check for Update”) button in  the iTunes and then release the “Shift” button.
 This will make iTunes prompt you to select the location for your  custom firmware 4.1. Select that custom .ipsw file and click on “Open”.
 Step 9: Now sit back and enjoy as iTunes does the  rest for you. This will involve a series of automated steps. Be patient  at this stage and don’t do anything silly. Just wait while iTunes  installs the new iOS 4.1 on your iPhone. Your iPhone screen at this  point will be showing a progress bar indicating installation progress.  After the installation is done, iPhone will restart automatically and  you should now have a fully jailbroken iPhone running on iOS 4.1.
 Step 10: Once you are done with the jailbreak  process. You can now restore all your settings, apps, music, contacts  and photos to the newly installed iOS 4.1 by restoring the backup that  you made in Step 2 from iTunes.
 Feel free to ask me any question here should you run into any problem  during the jailbreak process.
 Download iTunes 9.2 for Windows and Mac OS X
Download iOS 4.1 for iPhone 3GS, iPhone 3G and iPod  touch
Download .NET Framework 3.5 (required to run  Sn0wbreeze)
Download Sn0wbreeze 1.8 (Windows Only) [Fast Mirror  link]
 Disclaimer: This guide is for testing &  educational purposes only. Follow it on your own risk. I’m not  responsible for any loss of important data or malfunctioning of your  iPhone.