#1 First, download the iPhone1,1_1.0.2_1C28_Restore.ipsw [3] from Apple. On a Mac, do not unzip the file, iTunes will do this for you in step 4.
#2 Then connect phone to dock, and hold down home button and power button for about 10 seconds or until the screen goes black.
#3 Now release the power button but continue holding the home button. After about 10 seconds the computer will detect the iPhone in restore mode, and iTunes should tell that the phone needs to be restored.
#4 Hold down SHIFT key (Windows) or Option/ALT-key (Mac) when clicking the Restore button, and select the file you downloaded in step 1.
#5 Let the restore complete and ignore the error at the end. (Should be error 1013).
#6 Now your phone should show the "Connect to iTunes" screen with the yellow triangle.
#7 Run AppTap to jailbreak your phone - it will restore it to a working 1.0.2 firmware it even though you will get an error at the end. Just dismiss the error and quit the installer.
#8 Run AppTap again to actually install the installer.app. It should successfully complete. Keep rerunning AppTap if it doesn't work the first time - it may take a few tries.