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.