iOS 4.2 has just hit beta and there are workarounds to Jailbreak it. You can now JailBreak your iPhone 3GS on iOS 4.2 with older baseband and unlock it later using Ultrasn0w.
With this Jailbreaking guide, you will be able to Hacktivate iPhone 3GS and Cydia can be installed via SSH.
Important: This bundle is meant for iPhone 3GS with old bootrom only. New bootrom users will have to wait for the upcoming GreenPoison tool, which would be released very soon.
The following step by step guide will help you guide on how to patch the existing version of PwnageTool so that it can jailbreak iOS 4.2 Beta on iPhone 3GS. Your device should be jailbroken atleast once with any of these tools redsn0w, PwnageTool, Blackra1n or Sn0wbreeze.
Install OpenSSH from here:http://apt.telesphoreo.org/cydia/debs/openssl_0.9.8k-9_iphoneos-arm.deb and here http://apt.telesphoreo.org/cydia/debs/openssh_5.2p1-8_iphoneos-arm.deb/ so that you can copy and install stuff without Cydia.
Step 1: Download PwnageTool 4.01 and latest version of PwnageTool Bundle from msft.guy here
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