Download the latest Redsn0w
here.
Download iOS 4.2.1
here.
Open Redsn0w.
Click Extras.
Click Custom IPSW.
Select your iOS 4.2.1 IPSW.
Allow Redsn0w to create your new NO_BB IPSW.
Once done, on the Extras section, select Pwned DFU.
Follow the steps to put your phone into Pwned DFU.
Open iTunes.
Bypass the popup that iTunes tells your to restore your iPhone.
On a Mac: hold the Option key and click Restore in iTunes.
On a PC: hold the Shift key and click restore in iTunes
Select your new NO_BB IPSW.
Allow iTunes to restore your iPhone.
Set up as new device through iTunes and also on your iPhone.
Open Redsnow again.
Select Jailbreak.
Follow the steps to put your iPhone into DFU mode.
Allow Redsn0w to Jailbreak your device.
Select "Install Cydia" and "Install iPad Baseband".
Open Cydia on your device, search for and install Ultrasn0w. Reboot and you should be done!