The Dev Team just released PwnageTool 4.2, a jailbreak for iOS 4.2.1 for iPhone 3G, iPhone 3GS, and iPhone 4 (AT&T and Verizon), as well as the iPad, Apple TV, and iPod Touch 3G and 4G.
PwnageTool will allow you to jailbreak your iPhone on the latest iOS 4.2.1 while preserving its baseband, thus allowing you to unlock with UltraSn0w, assuming you are still on baseband 01.59.00.
This step by step guide will show you how to jailbreak your iPhone 4.2.1 with PwnageTool, a Mac-only jailbreak for iPhone...