Credit where credit's due: These are instructions for installing an AOSP (Android Open Source Project) build of Android 2.3 Gingerbread. It was compiled by Chris Soyars, who's far more of a bad-*** at this than I.
Download the Gingerbread build from Mr. Soyars. (link) Copy it to your Nexus One's SD card.
(If you have custom recovery already, skip to No. 5.) If you're running a stock Nexus One, you'll need a custom recovery to flash the Gingerbread build. Easiest thing to do is to download Amon Ra's recovery (link), then copy it to the /tools folder in your Android SDK directory. (You've already downloaded that, right?)
Reboot the phone into the bootloader (turn off, hold trackball and power) and plug into your computer. Make sure your hboot verison is 35.0017. (If you have the latest OTA, you should be good. But double-check.)
Type fastboot flash recovery xxxxxxxxxxxx (where xxxxxxxx is the exact filename of the recovery image, including extension).
Now enter the recovery (from choose "bootloader," then "recovery").
Wipe data and cache (dunno if you have to, but it's a good idea).
There you go. You're now rocking Android 2.3 on your Nexus One.
Update: OK, nothing too much to see here. Video helps.