AFAIK you could technically jailbreak 4.2, the only thing is it would be tethered. That said, I don't think any of the devs will update their tools to support 4.2 until they have an untethered solution ready. Either way, unless you desperately need 4.2 features, don't update. And save your 4.1 SHSH!
Not if you're still in jail, the only reason you'd need to restore is if you were re-jailbreaking, but since nothing for 4.2 is out yet, it's a moot point.