A hacker called pod2g claims he's found an exploit that will allow a jailbreak of iOS 4.1, and other hackers from the jailbreaking community have confirmed it.
Jailbreaking (overriding Apple's software lock-down on iOS devices) is usually a cat-and-mouse game: hackers find a new exploit, and then Apple patches it with the next iOS update.
This time, however, things might be different, as this new jailbreak is based on a boot ROM exploit, meaning it targets a low-level part of the OS. Apple will have to update the hardware -- not the software -- to patch it.
Furthermore, it means that most iOS devices, regardless of the iOS version they have installed, may be vulnerable to the exploit: iPhone 4, iPhone 3GS, the iPad, and so on.