DevTeam released PwnageTool 4.2 utility. It is able to create a custom IPSW that can perform an untethered jailbreak on iOS 4.2.1. As usual it can preserve baseband version for unlockers. Devteam used the same method that was implemented in greenpois0n.
PwnageTool supports all 4.2.1 devices other than iPod touch 2G:
Jailbreak is even improved compared to GreenPois0n RC6:
PwnageTool also includes two very recent improvements to the 4.2.1 JB: iBooks was just fixed by @comex and @pushfix last night so that it works as intended on DRMed books, and the wifi problem on AppleTV 2G was fixed by @nitotv, @DHowett, and @saurik. Both of these fixes will also be available in upcoming Cydia package updates, so if you’re already jailbroken you can wait for those updates rather than restore and jailbreak again.
You can download the new PwnageTool from here. We will post tutorial for PwnageTool 4.2 soon.