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iPhoneDev team released the pwnage tool 2.0 on Sunday, they already have a update to that. The new ver. 2.0.1 fixes the following issues:

• It auto-finds the bl39 and bl46 files better, if they’re on your computer
• It creates the ~/Library/iTunes/Device Support/ folder if not present, which should help with some 1600 errors people have been having.
• Many people have reported the PwnageTool not starting up at all (the icon never stops bouncing). This issue should be resolved now.
• The Sparkle AppCast URL is fixed in this version, so automatic updates should work for future releases.

Note from the dev team:

Because of the AppCast URL fix, we recommend that everyone who downloaded PwnageTool 2.0 get this version, if they want to stay up to date automatically.
N.B: if PwnageTool 2.0 pwned your phone correctly the first time, you do not need to pwn again with 2.0.1.

Direct download link: http://thebigboss.org/repofiles/nonrepo/PwnageTool_2.0.1.zip

SHA1 10b6c7dc22286e7b70c3d5a92cda7d117426fda9.

Source: http://blog.iphone-dev.org/post/42931306/pwnagetool-2-0-1

Step 1: Use WinPWN 1.0 To PWN Your 1.1.4 iPhone. If you need WinPWN Get it: http://www.winpwn.com/files/winpwn_1.0.0.3_RC1_Setup.zip

Step 2: Install BootNeuter (Available Via Installer).

Step 3: Run BootNeuter and have it Neuter your iphone

Step 4: Make sure your iTunes version is at 7.7

Step 5: Grab a pre-created IPSW Made with PWNAGE 2.0 Mac. If you don’t have one made you can grab one here:

http://thepiratebay.org/tor/4305453/iThor__s_iPhone_2.0_Custom_Firmware_Vanilla_(5A347)

Step 6: Grab ZiPhone (Yes its Crap But hey it will get us into recovery mode) (http://download.ziphone.org)

Step 7: Run Ziphone & Jump your iPhone into NORMAL Recovery mode (available via advanced settings area in Ziphone) — This is the most straightforward way to get it into the proper restore mode

Step 8: In iTunes Shift+Click the Restore button and find your custom IPSW Firmware file.

Step 9: The restore occurs (You should see a crazy pineapple while its running on your iphone). Then you should see bootneuter automatically come up (this is pwnage unlocking, activating and jail breaking your iphone).

NOTE: DFU Mode did NOT work for me so to be safe stick with normal restore mode.

IRC Server – irc.iunlocked.org

Another simple guide available here – http://sleepers.net/news/2008/07/20/pwnage-option-for-windows-users/

Mac Users – http://sleepers.net/news/guides/pwnage-20-guide/

NOTE: THIS WILL NOT UNLOCK iPHONE3G.

Here are the steps for a successful 2.0 to 1.1.4 downgrade for those of you that updated to 2.0 and realized what a mistake it was. (Thanks goes to Geeb for finding the iTunes 7.5 solution, Thanks goes to Crumpx for the pwnage method). Note that this has been performed on a PC.

Ok, so you updated to iTunes 7.7 and then installed 2.0 and you’re stuck. Here are the steps to downgrade to 1.1.4. Note that the result of this guide will be that you will be back to 1.1.4 version of firmware with baseband of 2.0 (4.05.04_G).

1) The first problem in your downgrade is that you probably are getting error 20 in restore mode and error 160x in DFU mode. This is due to iTunes 7.7.  So, you now you need to uninstall iTunes 7.7 and install iTunes 7.5. Make sure after your iTunes 7.7 uninstall you reboot your pc as it requests you to. **OSX users, see note at bottom of page to downgrade your iTunes.

2) Now that you have  iTunes 7.5, you will still have the DFU driver for 7.7. This is good and will allow the process to work. Put your phone into DFU mode using the DFU steps.

3) Restore using iTunes 7.5. You will get an error like 1011, 1013, 1015. This is normal and expected. An error 1601, 1602, 1600 or anything else is not ok.

4) Once you get error above, leave iTunes open and kick your phone out of restore mode. I recommend just loading winpwn(PC) or pwnage(MAC) and pwning the device at this point. If pwnage fails to work, you need to restore your phone again. You should be able to use normal restore mode, however. Other ways to kick out of restore mode may be ibrickr, jailbreak 1.1.2 (boot phone), iLiberty+.

5) Once completed, you have a pwned device with baseband 4.05.04_G from firmware v2.0.

6) To get back to 04.04.05_G (1.1.4 baseband) load bootneuter. If you don’t have this, install it from installer. Run bootneuter with Neuter, 4.6, and unlock. When it’s done, you will have an unlocked 04.04.05_G right back where you started.

Note: if you get  a boot neuter error like 05, 02 or such, you probably have more steps. Unfortunately, there is no safe answer to this one.The only method I know of to do this is to use a patched version of Ziphone as described here. Before you do this, you should know the risks. Read my Ziphone warning here. Your other option is to just wait for dev teams pwnage v2.0. Direct download link for pc and mac: http://iphone-freak.com/en/page1/page1.html

Note for OSX users:
If you are on OSX and want to attempt to downgrade your iTunes, you can try these steps:

Load up Terminal and type the following:
killall iTunesHelper
sudo -s
rm -r /Applications/iTunes.app
rm -r /Library/Receipts/iTunesX.pkg
rm  ~/Library/Preferences/com.apple.iTunes*
rm -r /Applications/iTunes.app
rm -r /Library/Receipts/iTunesX.pkg
rm  ~/Library/Preferences/com.apple.iTunes*
rm -r /System/Library/PrivateFrameworks/MobileDevice.framework

Troubleshooting:
Some of you have reported “I am in DFU mode and keep getting error 20 from iTunes restore”. Answer, you are not in DFU mode. Follow the guide and the DFU link. An iPhone in DFU mode has no image on the screen and looks powered down.

Some of you are reporting error 160x (1600, 1601, 1602, 1604 etc) on the iTunes downgrade while in DFU mode. I suggest trying another PC. You may still have some residual files left over from the 7.7 install. Make sure you are in iTunes 7.5 with drivers from 7.7.

Source: http://sleepers.net/news/?page_id=216