It has been confirmed today by MuscleNerd of iPhoen Dev-Team that the next version of Redsnow will include an option which will allow you to untether your iPhone jailbreak on iOS 4.2.1 and you don't even have to restore your device.
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MuscleNerd: Thanks to comex, redsn0w can now handle much bigger files than ramdisk 25MB limit. Useful for “backup plan” 4.2 untether
MuscleNerd: @jkurtz87 it shouldn’t require a restore…just another redsn0w run. (That’s the goal!)
The advantage of this will be that you wont have to reinstall any of your iTunes’ or Cydia apps. All you ever have to do will be rerun Redsn0w jailbreak and it will be done!