I was using LocalIPAstore that Applehacker posted a while ago but it was wifi only and you had to install certificates and change DNS settings etc
I have found a version that you install from cydia and it works on normal 3G.
1. Go into Cydia and add the repo http://system.in-appstore.com/repo/
2. Go into the source and install > LocalIAPStore
3. Once it's installed go to settings (iphone settings) > scroll down until you find LocalIAPstore > you will see 2 options, click ON and then custom receipt is only for devices ios6+
4. VERY VERY VERY IMPORTANT you will ALWAYS do this before u EVER try to get in app purchases in a game or unlock features in an app - go to the app store and scroll down to the bottom of whatever page it is so you can sign out of your apple account this is so there is no way you will be charged
5. When hacking in app purchases never ever enter your password if requested, this method doesnt work on every single game and if you enter your password your giving apple your money, always sign out from the app store 1st just to make sure.
6. VERY IMPORTANT - this method works for a game called POU (IAPFREE doesnt work with this game) however, once localIAPstore is installed, hacking candycrush no longer works, to go get more time, lives etc on candy crush i have to turn off localIAPstore in the settings.
Use LOCALiapstore when IAPfree doesnt work for you, and turn it off in the settings when you want to use IAPfree as normal.
I can still hack real racing 3 with both installed, but candy crush doent work so i guess change it for different games.
Hope this works for you and have fun