The jailbreak for iOS 4.2.1 on iPhone 4 is available (check the guide to jailbreak iOS 4.2.1 with GreenP0ison RC 5 here) but updating your iPhone 4 to iOS 4.2.1 upgrades the 1.59.00 baseband that makes your iPhone unlockable (so far) if you rely on unlock.

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The following method lets you update to iOS 4.2.1 without updating the baseband and you can use greenp0ison RC5 to jailbreak without loosing the ability to unlock.

  1. Close all background applications.
  2. Download the latest version of Tiny Umbrella http://thefirmwareumbrella.blogspot.com/
  3. Download the iOS 4.2.1 for iPhone 4 from here.
  4. Connect your iPhone 4, run Tiny Umbrella and click Start TSS Server button.
  5. When done, turn off your iPhone 4 and keep it connected to computer.
  6. Enter your device in DFU mode. To do this, hold power and home button together for exactly 10 seconds and then release the power button but keep holding home button until USB device is recognized.
  7. Run iTunes.
  8. If you see the restore logo, that means you have not entered the DFU mode. When you enter DFU mode, the following message appears on iTunes.
  9. Click OK and restore your device to iOS 4.2.1
  10. by holding Shift Key (Windows) or Option Key (Mac), Clicking restore and browsing the downloaded iOS 4.2.1 firmware file.

[image via intomobile]