There are multiple threads that say you can preserve the baseband on iphone 4 going to 4.2.1 with TU and update instead of Restore. Notcom has also confirmed it. Maybe whatever apple introduced does not work with update.
Here is one.
https://forums.macrumors.com/threads/1059740/
Tweets from Musclenerd Dec 18th.
# @n00neimp0rtant we released a "minimal+unofficial" bundle for 3GS to get to 4.2.1, don't think we ever released one for i4 though 9:14 PM Dec 18th, 2010 via web in reply to n00neimp0rtant
# @n00neimp0rtant there isn't a BB check in 4.2.1 (whoever started that theory was wrong) 7:19 PM Dec 18th, 2010 via web in reply to n00neimp0rtant
# @dar11111 you definitely can...4.2.1 JB is already untethered for iPhone3G, old-bootrom 3GS, old-bootrom ipt2g (use redsn0w or PwnageTool) 7:17 PM Dec 18th, 2010 via web in reply to dar11111
# @n00neimp0rtant that was with 01.59 bb (but had to modify ultrasn0w for 4.2.1, which was the point of that screencap) 6:53 PM Dec 18th, 2010 via web in reply to n00neimp0rtant
# @ipaxy remember, even if you restore without hashes (using an iTunes alternative), you won't be able to boot untethered without them 6:37 PM Dec 18th, 2010 via web in reply to ipaxy