Why not jailbroken? I don't know much about it...what does jailbreaking do?
Jailbreaking allows read/write access to the iPhone filesystem without iTunes. Once you jailbreak, you have full control over the phone and can install any apps you want and do whatever you want to the phone. The four big reasons to jailbreak are: unlock the phone, install different themes to differentiate your phone, install apps and capabilities that Apple/AT&T don't allow (tethering, etc.), and to pirate apps.
The bad side of jailbreaking is that you are bypassing the security checks on the phone and to some extent trusting the jailbreaking installer and applications not to do malicious things to your phone. . Jailbreaking also voids the warranty (if you want Apple to fix an issue with your phone, they won't if it's jailbroken). Lastly, jailbreaking tends to add stability issues to the phone - there's some disagreement about how big a deal this is but everyone that I know who has jailbroken their phone for years can cite an example or two of some problem that developed due to jailbreaking at some point.
It's relatively easy to jailbreak - as long as you aren't on 3.1.3 (the latest firmware). 3.1.2 and lower are easy to jailbreak with applications written by people like George Hotz (geohot) and others. Just install and click some buttons and wait. Software is here:
http://blackra1n.com/
I personally jailbroke my iPhone for years so that I could unlock it and use it on T-Mobile with my ridiculously cheap grandfathered plan. But I stopped when I switched to AT&T to get an iPhone 3GS last summer. I miss all the customisability of the phone, and some of the apps (SBSettings is the big one that I really miss), but it's also nice not to mess with it as much. Still, I'm sticking with 3.1.2 just in case I decide to jailbreak (or need to travel internationally).
I'm amazed at how useful it is. I would buy it again in a heartbeat if I were to make the same decision again. Ohh and stock 3GS, not jailbroken.
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