http://rcm.amazon.com/e/cm?t=widgetsamazon-20&o=1&p=8&l=bpl&asins=B0044XU34C&fc1=000000&IS2=1<1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifrYou have to use PwnageTool 4.2 for creating custom 4.2.1 firmware files without the upgraded baseband when your iPhone relies on a carrier unlock. This will allow you to unlock your iPhone on old baseband using Ultrasn0w 1.2. You should note that PwnageTool 4.2 does not support iPod touch 2G.
You can download PwnageTool 4.2 for Mac from here. You can download iOS 4.2.1 for iPhone, iPod touch, iPad, and Apple TV 2G from here. After downloading PwnageTool 4.2 simply follow the step by step instructions posted here to jailbreak your iPhone using PwnageTool.