About a month ago we showed you how to use TinyUmbrella in order to update your iPhone 4 to the latest iOS without upgrading your baseband – therefore you could still use ultrasn0w to unlock. But that fun-ride is over… at least for now.
It seems that Apple has decided to put a baseband requirement on iOS. So at this point, if you are using Saurik’s server or tiny umbrella and trying to restore 4.2.1 on an iPhone 4, you will end up in recovery mode and tiny umbrella will not be able to pull you out of recovery. In this case, you will have to restore 4.1 again or you will have to restore 4.2.1 stock and be tether jailbroken. . If you are an unlocker, this is a no brainer. Do not update to 4.2.1 even to test it at this point.