- the version of the iPhone doesn't matter eg: could be a recent MC version;
- you have previously jailbroken it and you used Cydia; and
- when you used Cydia you clicked the "Make my life easier, thanks!" link
- Sn0wbreeze 1.5.2. by iH8sn0w (this helps you downgrade to 3.1.2); and
- BlackRa1n by Geohot (which does the jailbreak)
This is by far the simplest explanation I have seen on the Internet. Plenty of sites try to describe how to do it, but many such as redmondpie.com are a bit circular and are not very clear. However, thanks to redmondpie.com for bringing ToolJail to my attention!