iPhone Dev Team has updated the PwnageTool jailbreak to 4.2 andiPhone unlockers can now safely restore to a custom 4.2.1 pre-jailbroken IPSW and retain their current baseband and unlock. The new PwnageTool also includes two very recent improvements to the 4.2.1 jailbreak with iBooks fixes so that it works as intended on DRMed books and corrects the wifi problem on AppleTV 2G. Both of these fixes will also be available in the upcoming Cydia package updates PwnageTool also supports all other 4.2.1 devices other than iPod touch 2G:
iPhone3G
iPhone3GS
iPhone4
iPhone4-Verizon
iPod touch 3G
iPod touch 4G
iPad
AppleTV 2G