As you can see Musclenerd has stated the unlock for iOS 4.2.1 is a go and should be released by Sunday. The only bad news is that the unlock is only going to be for iphone 3gs and 3g.
The unlock won’t work for the iphone 4 because it uses a different baseband chip which in turn doesn’t have the same exploit used on the older iphones. Although the iphone 4 unlock is being looked into and looks promising. Apple has also recently taken a counter blow to jailbreakers and unlockers putting a baseband check and requirement for newer firmwares.
The cat and mouse game continues!