This is for 1.1.1 iPhone users. You do not need to downgrade to 1.0.2 for this; however, I believe this JUST JAILBREAKS your phone. You still need to activate it either by having a legit AT&T account or some other means. For those this applies to here are the instructions:
THIS IS FOR MAC USERS ONLY!!! I have posted here a special version of iJailbreak for the iPhone. This is based on Arix work at iJailbreak.com - I have simply revamped the code to make it work specifically for the iPhone, not the iPod Touch.
If you get an older version of Summerboard installed too, your dock will be at the top of the screen. Simply go into installer.app and remove Summerboard. There is an alpha of Summerboard available directly from their website that fixes some of the 1.1.1 problems.
1. Download the file below
2. Unzip it to your desktop
3. copy or move the folder to your applications folder
4. Have your iPhone plugged in to the computer and iTunes closed
5. Double click the iJailbreak for iPhone application in the iJailbreak folder in your applications folder.
6. Total time can be around 10 minutes, be patient.
DOWNLOAD-> - iJailBreak for iPhone
for INTEL Macs only. Currently working on a Universal Version if demand is high enough.
SOURCE: iJailBreak for the IPhone