Redsnow 0.9.6 can jailbreak iPhone 4, iPhone 3GS, iPhone 3G, iPod Touch 4G, iPod Touch 3G and iPod Touch 2G on iOS 4.2.1. iPad is not yet supported by Redsnow but you can use the PwnageTool to jailbreak iOS 4.2.1 on iPad.
But there is one problem that Apple has changed some private APIs used by Cydia and due to which Cydia crashes when you try to start it. Cydia for iOS 4.2.x is almost ready and the iPhone Dev Team is waiting for the final and public build of iOS 4.2.1 before they release it. As you get the full root access after you jailbreak your idevice, so you can also install the jailbreak apps via SSH.
Here is the step by step guide to jailbreak iOS 4.2.1 on iPhone and iPod Touch version with Redsn0w:
Step 1: Download iOS 4.2.1 GM (links to downloads or download pages are listed at the bottom of this post).
Step 2: Download iOS 4.1 final version.
Step 3: Download Redsnow 0.9.6 b2.
Step 4: Using the iTunes 10.1, update/restore your phone to iOS 4.2.1 GM downloaded in step 1.
Step 5: Start the Redsnow jailbreak tool and open the iOS 4.1 in it to star the jailbreak process. (Please make it sure that you selected the iOS 4.1 IPSW file in this step).
Step 6: Press the Next button after Redsnow identifies the IPSW file successfully.
Step 7: Now check the Install Cydia Option. You can also select any other option if available.
Step 8: Switch off your phone and connect it with the PC before you proceed.
Step 9: Follow the Redsnow on-screen instructions to put the iPhone into DFU mode.
Step 10: Wait a few seconds for redsn0w to do its thing. After you receive the DONE message, close Redsn0w and enjoy jailbroken iPhone on iOS 4.2.1.
iOS 4.1 Direct Download links:
Note: If you rely on unlock, don’t update you device to iOS 4.2.1 otherwise you’ll lose carrier unlock and there is no unlock available for iOS 4.1 and above yet.
Disclaimer: This guide is for testing and educational purpose only. Use it at your own risk. This site will not be responsible for any type of damage.