There’s been a jailbreak for iOS 4.2.1 since November, but the redsn0w jailbreak tool currently provides a tethered jailbreak, which means you lose all the added functionality if you reboot your iPhone, iPod touch, or iPad. You have to re-jailbreak your phone after every reboot (which admittedly, isn’t all that often since iOS devices are pretty stable. Now there’s an untethered jailbreak utility which lets you reboot as much as you’d like after jailbreaking.
Just download and install the latest version of greenpois0n and you should be good to go.If you’ve already used redsn0w on your device, you can just run greenpois0n on top of it for an untethered jailbreak.
That’s the good news. The bad news is that Apple has patched the exploit used by greenpois0n in iOS 4.3, which means that you’ll probably want to hold off on upgrading when Apple releases the new operating system if you don’t want to lose your jailbreak.
Jailbreaking an iPhone provides access to files and settings that aren’t normally available. This allows you to do things such as install apps that aren’t available in the iTunes app store and customize the look and feel of your device.
The greenpois0n web site is getting hammered right now, so you may have trouble downloading the tool, but hopefully the site will be back online soon. In the meantime, there are a number of mirror sites for the OS X version including this one and this one.