So things go back and forth. Ultrasn0w has been updated and is even better yet! First, dev team has removed the daemon and used a method more similar to Geohot’s purplesn0w method. However, they did it in a manner that seems safer as it will not corrupt memory and uses less memory. From dev team blog:

To put it into perspective, ultrasn0w uses 152 bytes of properly malloc’d baseband RAM, which is 0.015% of what purplesn0w uses. Put another way, purplesn0w uses 6900 times more RAM than ultrasn0w (and doesn’t let the O/S know that it’s using it, so the O/S still thinks it’s free to use. When it does use it, the baseband will crash).

Also, there is another benefit. This uses mobile substrate to patch CommCenter unlike Geohot’s method which actually patches the CommCenter file. The benefit of this is that you are not modifying your system files and it is very easy to uninstall safely. You could probably just disable it with SBSettings mobile substrate menu as well.

I consider the current ultrasn0w the recommended unlock.

Geohot released a better 3gs unlock. It installs with his Cydia repository and patches some files on install. After this, no process or daemon is left running. This sounds like a better replacement for ultrasn0w. However, unlike ultrasn0w, it cannot be disabled with a toggle. A restore will restore the iPhone to stock locked state. Sounds very nice. Here are details from his site:

Wifi fails? Battery fails? Unlock fails? You need purplesn0w, the geohot 3GS unlock solution. Now I know you here a lot about different colors of sn0w, but I’m here to tell you why purplesn0w is the best. First off, what is purplesn0w? It’s a soft unlock for your 3GS that I’d actually use day to day. It’s not a daemon that takes any resources, and it doesn’t add a task to your baseband. It’s very close to a true unlock. All it does is patch three files, CommCenter, lockdownd, and your wildcard activation plist(which you need, activate w at&t sim first, no hacktivation support yet). That’s it, no other files are installed. Props to Oranav for the at+xlog exploit!
A full explanation is coming soon, but I think you clever reversers out there will see what it does, and see why it’s so pristine :-) The payload is radically different from other varieties of sn0w. beta as usual, back up first.

Be sure to have legit activated 3GS
Disable 3G if you don’t have it(like T-Mobile).
Add apt.geohot.com to Cydia
Install com.geohot.purplesn0w
Watch for success output in Cydia
Reboot, and enjoy your unlocked iPhone