GeoHot today posted a photo of a jailbroken iPod Touch running iPhone OS 3.1. He eventually made it. As of now there is no more information available, but it is likely that this is the approach he and the Chronic Dev Team were talking about.
According to ArsTechnica.com Apple’s latest update of the iPhone SDK agreement contains terms that explicitly forbids developers to use the iPhone SDK to be used to create applications that require jailbreak.
We don’t expect that this will either stop people from developing apps for jailbroken iPhones, as we feel this is a problem Apple addresses in the wrong manner, nor do we think this will stop the hackers like the iPhone Dev Team to create jailbreaks. As long as certain applications (like browsers) are not allowed in the AppStore and as long as Apple denies access to the underlying BSD Unix, people will go on enabling these features on a different way.
The recent developments like the CydiaStore show that there is a market for Apps that run on jailbroken iPhones.