It seems like Apple has created yet another obstacle for jailbreakers and unlockers, with the introduction of a baseband requirement for iOS starting from the newly released iOS 4.2.1 firmware. As Reported by Semaphore, the creator of the popular TinyUmbrella program was the following:
These are instructions on how to jailbreak your iPhone 4 on the 4.2.1 firmware using RedSn0w for Mac. You will only be able to perform a tethered jailbreak at this time. This means you will need Redsn0w’s assistance to boot into your jailbroken device.
If you want to jailbreak a lower firmware version you can find the appropriate tutorial just keep scrolling down the page.
Make sure not to update to iOS 4.2.1 if you need an unlock as one is not yet available!
Create a folder on your desktop called Pwnage