The iPhone Dev. team has explained in a pretty lengthy blog post about Geohot’s limera1n exploit for the iTouch devices, updated version of redsn0w, iOS 4.2 and unlocking your iTouch device on iOS4.2. First and foremost, Geohot’s limera1n exploit is capable of jailbreak-ing all iTouch devices on any iOS version.
The latest version of redsn0w incorporates the limera1n exploits along with custom boot logos for the iPhone 3G/3GS and iPod 2G devices and an option to apply DFU’ button in PwnageTool. iTouch device owners who have unlocked their device are recommended not to tinker around with any of the latest exploits until an easier method comes out.
If users make any mistake, they might lose their unlock permanently. The blog post also mentions that the iOS 4.2.x jailbreak is untethered at the moment. Users need to wait until @comex manages to come up with a way to untether it.
For now, only the iPhone 3G, older bootrom based iPhone 3GS and iPod Touch 2G (non-MC) can be untethered jailbreak by redsn0w on iOS4.2.x.