Jailbreaking means unlocking the iPhone so you can download whatever you want onto it. Cydia is very good for that.

To use the iPhone with another cellphone provider (for instance, I wanted to use my T-Mobile prepaid sim), you need to both a jailbreak and a carrier unlock.

I'm going to talk about needing to do both. I've done it several times, and each time I found it to be a long, complicated process. There isn't just one magic program that'll do it for you. Instead, you have to get your phone's serial number, other metadata, do google searches, figure out firmware, which version to downgrade from, which to upgrade to, and each individual case could require its own process, specially tailored. Google "redsnow" to start the process of figuring out what's involved. And then every so often you'll find a phone that simply can't be unlocked. Only encountered that once.

So, if you're fairly good with tech, computers, figuring stuff out, troubleshooting, it's very worth it.

However, last time I did this was a year ago, so maybe things have changed.