iPhone dev team who always succeeds in jailbreaking iPhones and other iOS devices has done it again. They are able to unlock all iPhones running on iOS 4.2 except iPhone 4. MuscleNerd, a member of iPhone Dev team tweeted
Finally got ultrasn0w working fully on 4.2.1. Apple inadvertently(!) broke ultrasn0w via aggressive compiler optimization
The jailbreak tool for iPhone 3G and iPhone 3GS will be released soon(may be tomorrow) even though they are still trying to figure out a way to unlock iPhone 4. Read more details on this at dev team blog.