We can confirm with 100% certainty that iPhoneSIMfree.com's software solution completely SIM unlocks the iPhone, is restore-resistant, and should make the iPhone fully functional for users outside of the US.
Engadget tested the hack with an active T-Mobile SIM and was able to confirm that everything worked except for Visual voicemail and YouTube, although the latter can be manually activated following this guide. The unlock method seems to be restore and upgrade resistant, too. Engadget factory-restored their iPhone with the 1.0.2 firmware and the unlock stuck around. You can see the complete notes on the install here.