In short, the latest 4.2.1 firmware. Jailbreak is possible only if you have a Mac (meaning untethered), and beta flasher is very unstable.
My advice — put 4.1, it does not differ from 4.2.1 in addition to air services, which I am more than sure you don't need.
If you update to 4.2.1 unable to say goodbye to Gail in principle.
Before you update to 4.1 make sure to save SHSH BLOB in Cydia!
Tethered jailbreak I do not see at all.