How to use a locked iPhone with firmware 2.0.2 [Security Issue] [Update]

Thanks to a tipper on the MacRumors forums, we now know how to access the rest of your iPhone even when locked with a password.

The hack requires that you have iPhone 2.0.2 installed, and have at least one favorite in your contacts list.

Instructions (and now, new info on this security hole straight from Apple) after the break.