unlocking is free and
easy. No need to pay.
Depends on what firmware you are using and how you set up itunes.
If your running anything less than 2.2 firmware then you MUST set itunes to not auto update the software or it will download and install 2.2, wiping all your data and returning it to its locked state.
If your runnin 1.1.x then you can install Installer and then from that Cydia. This will give you access to free apps that people make. Some might not work or might blow up and take half your arm with it (not true)
However 2.2 is now fully jailbroken and unlockable. I would recommend backing up your iphone through Itunes then updating to 2.2 firmware and then using the Quickpwn tool to jailbreak it. This will active the phone for you AND install Cydia and Installer. However 2.2 will give you access to the Apple App store where some apps and free and others are pay only. If your running on anything other than 02 then you will need to unlock using iphonedevs recently released yellowsn0 tool which is downloadable via Cydia.
Google iphonedev team. or go here>
http://blog.iphone-dev.org/