nope
Is this a new development with iOS4?
The latest ultrasnow 1.2 supports unlocking on 3G/3GS baseband of upto 05.13.04 (iOS 4.0.1) and iPhone 4 baseband of upto 01.59.00 (iOS 4.0.2 I believe). At the moment it supports 3G/3GS unlock on the latest 4.2.1 firmware as well but it first requires a baseband update to 06.15.00, which is taken from the iPad 3.2.2 firmware (both shares the same modem chip).
The procedure is however irreversible which means you can't ever return the phone to factory state through iTunes, and that you're forever stuck with cutom IPSW file when you need to recover your phone. Also some people who have done this have reported issues with GPS functionality so you'll be taking a lot of risks.
to unlock 4.1 you need to of gone from 4.02 to 4.1 and kept the old baseband using trickery. the default 4.1 baseband is not unlock able as far as i knowChances are if you bought a phone now it would come with 4.1 and you'd be able to unlock it with ultrasn0w.
I've heard that Tesco use the O2 network, so I was wondering.....I have a tesco sim, would this work in an iphone 4 locked to O2?
Although he'll need a micro-sim for the IPhone 4 and I'm not sure if Teaco will send one out without converting you to an iPhone tarrif first.
Give them a call and ask the question.
If you're feeling ghetto you can always cut it down yourself, but then you'll still have no data access so it's worth enquiring about their 3G data plan, if they do it.