iPhone jailbreaking may have been legalized by the Library of Congress, but that doesn’t mean Apple has to make things easier for would-be hackers and tinkerers. In it’s most recent effort to thwart jailbreaking, TIPB reports that the most recent iOS update (iOS 4.2.1) now comes with a boot level signature check that precludes a device from booting up if the baseband firmware is not correct.
If you try and implement TinyUmbrella when installing 4.2.1 you will be thrown into recovery mode without the ability to kick yourself out of it unless you install the new baseband or downgrade back to iOS 4.1 (if you’ve saved your SHSH blobs).
If you plan on unlocking your iPhone it is recommended that you hold off on installing 4.2.1 as there is no current method available to maintain an unlockable baseband.
And so the cat and mouse game continues.