Jailbreaking and unlocking are too different things but follow one another...
to make it simple. first you jailbreak the iPhone then unlock it by software method. in other words u first liberate (jail break) the iPhone from the protection, then u attack and unlock it to work with other networks...
so jailbreaking of 2.2.1 is possible but not unlock.. once the phone is jailbroken u cant install the 3rd party softwares.......

at any point u can make a factor reset... by replacing the original firmware. but remember once u upgrade your iPhone (accidentally or incidentally) to firmware 2.2.1, u cant bring back it to 2.2, read my above post for details...