Yesterday, Apple released iOS 4.0.2 for iPhones and 3.2.2 for iPad fixing security vulnerability associated with viewing malicious PDF Files and eventually putting an end to web-based JailbreakMe. Apple fixed the hole for all iDevices except for iPhone 2G and iPod Touch 1G users. Security firm Websense analyzed the entire mechanism of jailbreaking and said that PDF Exploit can be used by hackers to attack any iPhone in the world.
For iPhone 2G and iPod Touch 1G users, Saurik has developed Cydia package PDF Patch that will fix the holes for all devices and all firmware versions (even going back to version 2.x!). We will keep you posted once the PDF Patch Cydia package is out. PDF Patch fixes PDF exploit hole from iOS 2.2 to iOS 4.0.1 firmware.
Update #1: For those who know their way around the bash shell and dpkg, please try out this fix and send any pertinent feedback to @saurik.