Upgrading software iPhone 3G

I know there are many questions regarding my concern but I need a clear answer to my case. I have a 3G and like two months ago it fell by accident and the LCD went bad. I called Apple and since I had not warranty they said I should just get a new one because it will cost the same that fixing it. I qualify for a new phone with ATT but I did not want to buy a new one because the new two year contract, which I will sign when the new iPhone version comes out. I decide to use my old phone but later found out that I could get it fix for $100.00 which I did. The person who fixed offered to unlock and jailbreak the phone for the same price. At first I said no, but later since the phone is out of warranty and I plan to buy a new one as soon as is available, I told him to do it so I could use the unlock one while in South America when ever I go there. The phone is working fine but I will like to update the software.The guy told me it will lock it. I do not care about the iphone being lock again, just want to be sure is possible and safe to do. Thanks and sorry for the long post.
Mac Book Pro 17" Mac OS X (10.5.7)