It is important to understand the conformational features of the unfolded state in equilibrium with folded state under physiological conditions. In this paper, we consider a short peptide model LMYKGQPM from staphylococcal nuclease to model the conformational equilibrium between a hairpin conformation and its unfolded state using molecular dynamics simulation under NVT conditions at 300K using GROMOS96 force field. The free energy landscape has overall funnel-like shape with hairpin conformations sampling the minima. The "unfolded" state has a higher free energy of approximately 12kJ/mol with respect to native hairpin minimum and occupies a plateau region. We find that the unfolded state has significant contributions from compact conformations. Many of these conformations have hairpin-like topology. Further, these compact conformational forms are stabilized by hydrophobic interactions. Conversion between native and non-native hairpins occurs via unfolded states. Frequent conversions between folded and unfolded hairpins are observed with single exponential kinetics. We compare our results with the emerging picture of unfolded state from both experimental and theoretical studies.