From the iPhone Dev Team:
After a few very dramatic days in the jailbreak community, geohot has come out of nowhere to release limera1n. It’s a bootrom-level jailbreak that works on the iPhone3GS, iPhone4, iPod touch 3G, iPod touch 4G, the iPad, and (technically) the AppleTV 2G.
DO NOT USE LIMERA1N IF YOU USE THE ULTRASN0W CARRIER UNLOCK — wait for PwnageTool to incorporate the limera1n exploit. This is so that you can avoid updating your baseband and losing the unlock (possibly forever).
Limera1n uses a different exploit than SHAtter, and in fact covers more devices. Although some may question geohot’s dramatic and competitive style, he obviously does have considerable skill pulling this together in just over a day (although he’s had the underlying exploit for months). Credit also goes to @comex, who provides the untethered aspect of limera1n via another one of his growing list of kernel hacks.
The release of limera1n has (thankfully!) averted the burning of 2 bootrom holes at once (both his and SHAtter). Releasing SHAtter now would be a complete waste of a perfectly good bootrom hole in light of limera1n, and so it can be held until Apple closes limera1n’s hole. While there’s no guarantee that Apple won’t also close SHAtter by then, it provides a ray of hope for devices after Apple’s bootrom respin. Meanwhile, look for an alternate implementation of the limera1n exploit in greenpois0n (and possibly other tools), where it should undergo more testing too.
Limera1n wasn’t tested very thoroughly and does have some issues. Geohot typically works these out in subsequent (and rapid) releases (there are already 3 beta versions of it as of Saturday night!). In the meantime, feel free to discuss any problems and their solutions in our comments section.
Update #1: Because the “untethered” part of this jailbreak comes from a userland hack from @comex, you should still backup your SHSH hashes for 4.1. Do this by either letting Cydia keep them (“make my life easier”), or using Tiny Umbrella. This way you can always come back to an untethered, jailbreakable 4.1 on your devices after Apple has closed their 4.1 signing window (they’ll close the 4.1 window once they push out their next firmware version). If you fail to do this and ever need to restore to 4.1 again, you can still jailbreak but it will be a tethered JB (you’ll need to connect to your computer to finish the booting process, each and every time).
And remember: you can backup your 4.1 SHSH hashes without even being at 4.1 or even being jailbroken, by using Tiny Umbrella.