According to MuscleNerd conversation which took place on his Twitter account, he declared about new features on the upcoming Redsn0w version
which will not only allow to be an untethered jailbreak for all devices running iOS 4.2.1, but it will upgrade the devices which rely on tethered jailbreak to untethered one without restore, you will only need to use the new version of Redsn0w.
Thanks to comex, redsn0w can now handle much bigger files than ramdisk 25MB limit. Useful for "backup plan" 4.2 untetherThis also means that you will never lose any data, applications or any tweaks installed from Cydia, thanks for Dev-team for the hard work. About the timing, most of the indicators tend towards the Xmas (Dec 25) at the worste case according to this post. Of cours we will let you know with all updates related to the new Redsn0w. Stay tuned.