Is it possible to unlock a 3GS @ 5.1.1 BB is 05.16.05 and the serial # is XX206XX so I can't upgrade to the Ipad BB. From what I have read Ultrasnow wont unlock this BB, are there any other options ? Thanks in advance

Ignore the morons telling you to pay for an unlock. You almost certainly can unlock this phone via software for free.

1) Determine when your iPhone 3GS was manufactured. There are threads all over the place to tell you how to do this. If your iPhone was made after the 34th week of 2011, DO NOT CONTINUE WITH THESE STEPS. You will not be able to unlock that phone with this method if your phone is newer than the 34th week of 2011.
2) Download redsn0w.
3) Jailbreak the phone, and while jailbreaking, upgrade to the iPad baseband.
4) After the jailbreak and baseband update is complete, run redsn0w again.
5) Tell it to downgrade the baseband.
6) When that is complete, your phone will be jailbroken and on the 05.13.04 baseband.
7) Install ultrasn0w
8) Reboot the phone

You should be unlocked and have service. If your phone is newer than the 34th week of 2011, the easiest (and cheapest) way to get the phone unlocked is to contact the carrier the phone is locked to and request the unlock code. If the account associated with the phone is in good standing and the phone is not currently under a subsidy contract, they should provide you the permanent unlock code.