ih8sn0w team has just released sn0wbreeze 2.1 that can jailbreak iPhone 3G, 3GS, 4 iPod Touch 2G, 3G, 4G and iPad and Apple TV.

Here are instructions to jailbreak iOS 4.1 on an iPhone, these instructions are almost same for all iOS devices.

How to jailbreak

1. Download and install the latest version of iTunes if you haven’t.
2. Download iOS 4.1, download according to your device:
   - iPhone 4
   - iPhone 3GS
   - iPhone 3G
   - iPod touch 2G
   - iPod touch 3G
   - iPod touch 4G
3. Download Sn0wbreeze 2.1 (Download link) and run it.
   
4. In IPSW selection window, browse for the downloaded iOS 4.1 firmware file and click next.
   
5. If firmware is verified by sn0wbreeze, you will see a verification notification. Click next after that.
6. Sn0wbreeze will now modify your firmware and when it is done, your firmware is jailbroken and ready to be restored.
7. Run iTunes and restore your device to the modified iOS 4.1 by holding Shift Key (Windows). Clicking restore and browsing the modified iOS 4.1 firmware file.