I have a iPhone 4 w/ iOS 4.0.1 and I want 4.1 but do not want to lose my jailbreak. When I update to 4.1 should I use limera1n to jailbreak and how would I do that??
You will lose your JB.
Go to itunes, upgrade to 4.1, get limera1n from the site, plug iPhone into USB port and set limera1n going - follow instructions.
By not lose my jailbreak you mean not lose your JB addons you installed on 4.0.1?
Every time you update the firmware you have to JB again and install all your cydia packages, themes etc.. all over again.
You can use pkgbackup to install them all at once or one at a time on your own.