Step 4: You will now be asked, if your iPhone is a newer version or an older version. If your iPhone 3GS is a newer version then click ‘Yes’, otherwise, click ‘No’.
Step 5: Your iPhone firmware will now be verified by RedSnow. After the firmware has been verified successfully, you can click the Next button.
Step 6: RedSnow will now start preparing the data in order to jailbreak your iPhone 3G, 3GS or iPhone 4.
Step 7: After a while, you will be provided with different options to choose. Make sure Install Cydia option is selected. If you choose to install your custom logo, then tick the box titled Custom Boot Logo and Custom Recovery Logo. Finally, click Next button to continue.
Step 8: A window will appear asking you to confirm, whether you want to upgrade your iPhone baseband to iPad baseband 06.15. If you choose No, you will not be able to unlock your iPhone. Press the Yes button to continue with the jailbreak process. When you click ‘Yes’, the iPad Baseband option will automatically be selected.
Step 9: Connect your iPhone to the computer and turn it Off. When done, click the Next button.
Step 10: You will now be asked to put your iPhone in DFU mode. You can also read the tutorial below to learn how.
How to put your iPhone in DFU Mode
Step 11: After the iPhone is in DFU mode, RedSnow will automatically start downloading the iPad baseband on to your iPhone. After the process is finished, your iPhone will reboot itself.
Step 12: Sit back and relax while your iPhone completes the jailbreak process. After the process is over, your iPhone will reboot and you will notice Cydia on your iPhone SpringBoard, which you can then use to unlock your iPhone.
To unlock your jailbroken iPhone 3G, 3GS or iPhone 4, read this tutorial:
How to Unlock iPhone 3G, 3GS or iPhone 4 on 4.2.1 firmware