The Cydia Store now has a great extension available for jailbroken iPhone and iPod touch called Fullscreen for Safari that allows for not only toggling Safari into fullscreen mode for completely unobstructed browsing, but additionally includes multi-touch gestures.
You can do things like two finger swipe left/right to switch tabs, two-finger swipe up/down to either open a new tab or close the current tab respectively, and shake to toggle full screen mode
This Cydia extension is seriously sweet, and I would absolutely consider that a must-have for all iPhone and iPod touch jailbreakers (not yet available for iPad). You can follow the developer, @Yllier, on Twitter to keep informed of any updates
Here, this package costs $1.49 and has functionality and options that will completely change the way you use Safari.