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.

iphone-4-jailbreak-cydia-mywi-jailbreakme.com_-650x4871

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.