Contains data used by Apple iTunes for software restores and minor updates to the iPhone and iPod Touch; can be deleted if corrupted, which will allow iTunes to download a new copy of the software update.
iPhone IPSW files are located in the following locations:
Mac OS X: [user]/Library/iTunes/iPhone Software Updates/
Windows XP: \Documents and Settings\[username]\Application Data\Apple Computer\iTunes\iPhone Software Updates\
Windows Vista and 7: [user]\AppData\Roaming\Apple Computer\iTunes\iPhone Software Updates\
For iPod updates, replace "iPhone" with "iPod" in the directory locations above.
IPSW are created in the .ZIP format. Therefore, you can unzip them using any Zip decompression utility. The archive includes encrypted .DMG files, one of which stores the file system contents. This file can be decrypted using tools such as VFDecrypt, iDecrypt, and iDecryptIt.