Hi Windy,
First of all make sure the term "Unlocking" and "unblocking" don't get confused.
"Unlocking" a mobile phone allows it to be used on any network when the appropriate SIM card is used, i.e. the same phone could be used on Vodafone, or Orange, or O2 etc just by swapping SIM cards.
Mobile phones are usually "locked" by the first network provider that supplies it, in the hope that the customer will stay with them long enough to offset the initial phone cost / discount cost etc.
This is why a contract phone is often supplied "free" or at a big discount, while Pay As You Talk handsets cost more - the procedures for unlocking both are the same.
The network operator that supplied the phone is obliged to provide you with the unlocking code, although many will charge an "Admin Fee" of a few pounds to do so, and may not provide it if you are still tied to a fixed term contract ( usually 12 months ) as above.
The phone unlock code, is generated by a computer program that uses a combination of the mobile phone "IMEI" Number ( Serial number ), the network provider, make and model of the phone.
There is a host of freely available software that will generate unlock codes for the majority of phones, and while some of the codes can be input directly using the keypad, some have to be input via a special cable connected to a computer.
There are also companies that will provide the code by e-mail, after you send them the required information and payment.
There is absolutely nothing wrong with unlocking a phone in this way, provided you are the legal owner of the phone and that you are not bound by the terms of any initial contract with the supplier not to do so.
High Street Mobile phone shops will carry out the procedure for you for a fee - usually £5 or £10, this is to pay for their time and the cost of purchasing computers / connection cables etc.
"Unblocking" a phone is a different kettle of fish altogether !
This is where a phone has been "blocked" - usually because it has been reported stolen.
The IMEI number will be registered across the networks to prevent it being used on any of them.
It IS ILLEGAL to "Unblock" a phone, or to change its IMEI number etc.
Coconutty