I'd be interested to know the answer to this because now the iphone is out on Pay as you go on o2 i planned on buying it this week and then jailbreaking it so my orange sim would work in it. I can't stand o2 and wouldn't want get stuck on that network. Hope someone can answer this question.
It will not work with your orange SIM card or any other SIM card unless it is an official unlocked iPhone 3G from Italy (or one of the asian countries that sell it unlocked).
Jailbreaking lets you use third party applications not supported by Apple. That is all that jailbreaking does.
iPhone 3G can be unlocked. There's a variety of hardware sim unlocks. Software unlocks are also an inevitability. The dev team just hasn't gotten there yet.
I think i might go and get a iphone on O2 pay as you go, get a yessim and see if that will work. I don't want to sand down my sim card don't yessim provide a tray so you don't need to sand anything down?