EDIT2: Since Google patched the loop hole in 2.2.1, this app is no longer working for newer builds. For this reason the developer has stopped supporting the app. If you still want to use this, feel free to do so. It would not harm anything.
However if it doesn't root your phone, there are numerous other methods of rooting out there. I suggest SuperOneClick or unrevoked.
EDIT: I see that a lot of people have no idea what rooting is, or don't even know how to install an apk. Seriously, rooting can potentially harm your phone if you have absolutely no idea what you're doing. For that reason, I strongly recommend you hold off using this app (or rooting in general) until you have done enough research and are more comfortable with Android.
If you insist on using this app, use it at your own risk. You have been warned!
This is a good post to guide you through how to flash a custom rom, after rooting your phone. And no, this app does not unlock your bootloader.
Important: I'm not the developer, click the link below for the blog for official release of this app
Official releases here
Aug 30 Update: added v1.6.2 beta 5, added support for more devices, added widget for soft root
Aug 12 Update: added v1.6.1: superuser updated, HTC Tattoo support added. Check official link for changelog
Aug 10 Update: added v1.5.3 for peeps who can't access the link
Official list of supported devices:
Supported Devices: Google Nexus One (2.2) Google G1 (1.6) HTC Hero (2.1) HTC Magic (1.5) (Select Do not install Superuser) HTC Tattoo (1.6) Dell Streak (2.1) Motorola Milestone (2.1) Motorola XT701 Motorola XT800 (2.1) Motorola ME511 Motorola Charm Motorola Droid (2.01/2.1/2.2 with FRG01B) Sony Ericsson X10 (1.6) Sony Ericsson X10 Mini (1.6) Sony Ericsson X10 Mini Pro (1.6) Acer Liquid (2.1) Acer beTouch E400 (2.1) Samsung Galaxy Beam Samsung galaxy 5 (gt-i5500) Vibo A688 (1.6) Lenovo Lephone (1.6) LG GT540 (1.6) Gigabyte GSmart G1305 Not supported: Google Nexus One (2.2 FRG33) Samsung i9000 / i6500U / i7500 / i5700 Motorola ME600 / ME501 / MB300 / CLIQ XT Motorola 2.2 FRG22D Archos 5 HuaWei U8220 HTC Desire / Legend / Wildfire (soft root) HTC EVO 4G / Aria SonyEricsson X10i R2BA020 myTouch Slide
Nexus One 2.2 Milestone 2.1 Hero (GSM/CDMA) Xperia X10 mini Xperia X10i G1 1.6 Magic 32A 1.5 Magic 32B 1.6 Mytouch 3G (3.5mm) Mytouch 3G Slide (v1.6.1 seems to put the phone into reboot loop) LG Ally Droid X 2.1 Moto Charm Moto Flipout Kyocera ZIO
All credits go to the developer!
Install and run it on your phone. If you have trouble downloading, try download with a computer.