The iPhone Dev Team has released an unofficial PwnageTool bundle for the iPhone 3GS and iPhone 3G.
The bundle enables users to update to run iOS 4.2.1 on carrier unlocked phones with baseband versions lower than 05.13.04. However, users of later versions will have to upgrade the baseband to the risky 06.15.00 version, harwested from iPad.
Going for the 06.15.00 baseband might not be an ideal solution in the long run, as this particular BB was originally intended for the iPad and could prove troublesome in future upgrades.
This, however, enables users to update iOS with relative ease, using Ultrasnow 1.2, provided that the phone is already jailbroken. More importantly the bundle also offers hope for the less fortunate ones whose phones were bricked through updates. The Dev Team is working on a way to unlock the iPhone 4 as well, since many people are stuck with iPhone 4 handsets that they cannot unlock.
You can get the full lowdown at your own risk of course, here.