According to Financial Times iPhone users can now legally modify their phones. The US Copyright office announced rules today allowing users to modify their phones to allow them to switch networks and add applications to the phone that were previously not allowed by Apple.
This decision is a major blow to AT&T who is currently the exclusive carrier for the iPhone. This also majorly effects Apple's closed app ecosystem where the company had final say on which apps you were allowed to install. Apple is known for it's notorious control of it's software and products.
A free speech advocacy group known as Electronic Frontier Foundation has been lobbying for these changes that had previous allowed too many exemptions and protection.
Note that any modifications will still void your warranty.