Just yesterday, iPhone Dev Team has released the Redsn0w o.9.6b2 to jailbreak all iPhone and iPod Touch devices running iOS 4.1. Redsn0w 0.9.6B2 tools also allows iPhone users to put into Pwned DFU mode where you can restore custom firmware to preserve baseband to unlock devices.
Now today, Apple has pushed iOS 4.2 GM (Gold Master) for Developers. The good news is iOS 4.2 is vulnerable to Redsn0w 0.9.6 b2. So you can jailbreak your iPhone 3G, iPhone 3GS, iPhone 4, iPod Touch 2G, iPod Touch 3G, iPod Touch 4G and iPad running on iOS 4.2 with Redsn0w 0.9.6b2.
But if you are looking for unlocking your device then should not update to iOS 4.2 until iOS 4.2 unlock tool is released. You should only proceed if you are developer of jailbreak apps as many apps (including Cydia itself) need to be updated for 4.2.
Follow the guide to jailbreak your iPhone & iPod Touch using Redsn0w 0.9.6 Beta 2.
How to jailbreak your iPhone & iPod Touch using Redsn0w 0.9.6 Beta 2
1. First update your iPhone and iPod Touch to the iOS 4.2, than connect your device to computer via USB and launch iTunes. (Download link for iOS 4.2 GM – for Developers)
2. Download Redsn0w 0.9.6b2 and launch it. Click on the Browser button and select the iOS 4.1 IPSW (not iOS 4.2).
3. Than click the Next button and Redsn0w will prepare data for Jailbreaking.
4. Now Select Cydia and also Uncheck.Check other option like Enable multitasking, Homescreen wallpaper & percentage etc.
5. Than turn off your device, connect to computer and click the Next button.
6. Now you will need to put your iPhone DFU mode. For that just follow the on screen instructions and your device will enter in DFU mode.

7. Now wait until the Redsn0w finish the process. Once it completed, you will have a jailbroken devices.
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