Jailbreaking iPhone/iPod Touch, is it illegal or not?

As with everything, there are some exceptions to this. If the system of unlocking or jailbreaking uses copyrighted code, then that would be illegal (violation of DMCA)... and that was the source of the big fuss over Nate True's jailbreaking method for firmware 1.1.3 (which has since been supplanted by legal methods). Also, while jailbreaking in and of itself isn't illegal, putting on Apple's additional apps from the January upgrade (Mail, Notes, Weather, Google Maps, and Stocks) without paying for them, is (obviously, this only refers to the iPod touch, since those apps are already on the iPhone). Putting on those apps without paying for them is piracy (in the same vein that downloading copyrighted music or movies without paying for them is piracy).Unlocking (iPhone only) for use on a carrier other than AT&T is also perfectly legal, so long as you are doing it for your own personal use. If you unlock for the purpose of selling that phone, then that would be illegal.Jailbreaking or unlocking might void your warranty, if future problems are potentially caused by the software. If your device suddenly starts coming unglued / falling apart... obviously that's a hardware issue, and would have occurred whether or not the device had been "hacked." But, if playback isn't working correctly, or other software issues crop up, Apple might say (correctly or not) that the issue is caused by the jailbreaking/unlocking and refuse service. Fortunately, for those of us with iPod touches, it's dead simple to restore to the default firmware and "unjailbreak" the device making it eligible for warranty service.

Hacking the iPod Touch is not illegal. While Apple would like to make you think it is illegal, it is not, and it is impossible to get in any legal trouble for hacking it. You and Apple made an exchange. You gave Apple $400 and they gave you an iPod. It is officially yours and you can do whatever you want with it.It is illegal to post copyrighted code, such as the operating system of the iPod Touch and the iPhone, on the Internet. But you won’t be doing that if you choose to hack your device.

This is a huge gray area to be honest. Although it may fall under DMCA, the EULA is NOT law. It's a license agreement - its saying that if you mess around with your product, they take not responsibility. And if you read the article on Wikipedia, you'd find that EULAs may or may not even be enforceable depending on your jurisdiction - http://en.wikipedia.org/wiki/EULAI wouldn't worry about it though. You're not going to be arrested. Your iPod Touch is not going to be seized. You're not going to get a felony conviction or even a misdemeanor conviction. That is, of course, if you don't steal the Apple January apps. Then all bets are off...