PWN is a word that is derived from "OWN". It could be that PWN was created by the frequent typo if the word OWN since the p and o keys are next to each other on a standard keyboard.
Engadget reported that the Pwnage Tool 2.0.2 will be ready for the iphone3G. More information about the tool can be found at http://wikee.iphwn.org/
So what is Pwnage?
Pwnage is based on an exploit found in the lower levels of the iPhone/iTouch bootloader.
With the Pwnage tool, we can now patch iPhone device to allow unsigned code. What this means is that once pwned, you will be able to install custom mad .ipsw files from iTunes into your device.
More info on Pwnage is found here http://wikee.iphwn.org/s5l8900:pwnage
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