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What is a SIM and what is unlocking
Ordinary cell phone service works so that the unique serial number in your phone (its ESN) is used by the cell phone service provider to identify who you are. The wireless service 'knows' that a particular phone's serial number is your phone and knows to send phone calls to that phone when someone dials your phone number.
A GSM phone is not directly linked to you. Instead, it has a removable account card, called a SIM (subscriber information module) and this SIM has a unique serial number on it. This is what identifies you to the wireless provider.
The important difference about this is that you can put your SIM into any compatible phone (and pretty much all modern GSM phones are compatible with all modern SIMs) and that phone will now act as your phone, because the wireless company sees your SIM inside it. It doesn't care that you've changed phones, all it cares is where to find your SIM.
And now for the really exciting part of this. Just as, in theory, you can put any SIM in any phone, the opposite is also true. Any phone can work with any SIM. So, if you've already bought an expensive phone that you like and have learned how to use, if you change from one GSM wireless company to another one, you don't have to change phones. You can keep the phone you've grown to like, and all you need to do is replace the first company's SIM with your new service provider's SIM.
But, some wireless providers 'lock' their phones, meaning that their phones have been programmed to only work with SIMs issued by their company. Reversing that programming - unlocking your phone so it can work with any SIM - is what this is all about.

GSM is a type of digital mobile phone service. The more common type of digital mobile phone service in the US is CDMA, but just about every other country in the world uses primarily or only GSM.
For you as the user of your phone, there is no difference at all between using a phone on a CDMA system or a phone on a GSM system. Unfortunately, the two different systems are not compatible with each other.
If you have a T-Mobile, Cingular, or recent new M-mode type service with AT&T, then you have GSM service.
 

Easy. Borrow a SIM from a friend who has an account with a different wireless service provider and see if it works in your phone or not. If it works, and your phone thinks it is his (or her) phone with that phone's number, then your phone is already unlocked.
But if it creates some sort of error message and doesn't work, then your phone is locked.

As far as we are aware, all GSM phones can be unlocked. But if your phone is not a GSM phone, then it probably can't be unlocked; indeed, the whole idea of locking/unlocking phones doesn't really apply to non GSM phones, because your phone number and account is tied to your phone, not to the movable/replaceable SIM chip that is inside it.

There are two main companies that offer GSM service in the USA. AT&T and Cingular are now merged into one company, and the second company is T-Mobile.
If your service is with, eg, Sprint, Nextel, Verizon, or just about any other US wireless company, then you do not have GSM service and your phone can't be unlocked.

Yes, N1 Wireless gives you the option to buy an unlocked phone without needing to sign up for a year or two of service. N1 has a full line of GSM Unlocked phones from Motorola, Nokia, Samsung, LG, Panasonic,Sharp, Sony Ericsson, Siemens, and Innostream. You can always count on getting the latest models and styles from N1 Wireless.

This logo (called a 'splash screen') has been programmed into your phone by the company that sold it to you. It doesn't mean anything about which company now provides you phone service.
Unlocking your phone removes the electronic restriction that prevents your phone from working with other SIMs from other wireless services. It doesn't change your splash screen.
The good news is you can get rid of the splash screen without needing to unlock your phone. See if you can find in your phone's manual how to change the splash screen, or consider calling the phone manufacturer and have them walk you through it.
 

GSM service is offered in 207 countries.

Click on the following link to check the frequencies are used in the country you are interested in:

WORLD GSM FREQUENCIES