I'm new to this. Someone at work showed me their jail broken phone yesterday and I am totally jealous. I have an 8G original iPhone and have been trying to research online what to do to jailbreak my phone. Everything seems so technical. I'm not a dummy but I also don't understand some of the tech-speak ppl are using. Can someone please help?

I use Windows and currently have the 3.0 version of the iPhone software, but can update if I need to.

Thank you in advance to anyone willing to help.

3.0 is perfect on your iPhone 2G. Check the tutorial here
iClarified - iPhone - How to Unlock/Jailbreak Your iPhone 2G on OS 3.0.x Using RedSn0w (Windows)

The iPhone will be jailbroken, activated and unlocked. Getting up to 3.1: Right now there is only a Mac tool available.

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iPhone 3GS factory unlocked (3.1.2; Blackra1n, Cydia, OpenSSH, custom 3.0 ipcc file (no sig), tethering hack by Dev team, 32 GB)
iPhone 3G (3.0.1; Redsn0w 0.8, Cydia, OpenSSH) 16 GB

I ran across that tutorial but wasn't sure if it was for my phone. Guess all I needed was a little reassurance. Thanks

OK so I followed the instructions and ended up losing everything on my phone. It was like having a brand new phone but it was jailbroke. When I tried to get onto Cydia at first it worked but then I started getting a bunch of error messages and was unable to download anything from Cydia.

Yesterday I restored my phone back to my old settings (un-jailbroken) because I can't function w/out my contacts.

Is there some way that I can jailbreak my phone and keep my contacts (and everything else on my phone), too?

You could download this app called ZYB Contacts from the App Store. Register with zyb.com and it allows you to backup your contacts online. After upgrading/jailbreaking your phone, just download the ZYB app and sync it and you're good to go.