Here's what iPhone Dev team had to say about this:
The new “Custom IPSW” button on the Extras screen will create a custom IPSW without the baseband update for 4.3.3 or 5.0gm (iPhone3GS and iPhone4 only, for now). Remember to NOT accidentally restore to the stock IPSW after you create the custom one! The custom one begins with NO_BB_ (for “no baseband”). On Mac iTunes, you select an IPSW by holding down the Option key while clicking “Restore”.We have posted the Guide below on how to Create And Install Custom Firmware iOS 5 on iPhone 4, 3GS With Baseband Preserved Using Redsn0w 0.9.9b5, so follow the guide you have to complete the following requirement.
You must enter “Pwned DFU” mode before trying to use the NO_BB_ IPSW with iTunes (and your hosts file cannot be pointing to Cydia’s servers due to the new blob nonce mechanism they’re using in iOS5).
Redsn0w 0.9.9b5 for Mac [Download]
Redsn0w 0.9.9b5 for Windows coming soon, so windows users have to wait for a while.
iOS 5 for iPhone 4 and iPhone 3GS
So let's start the Guide now:
Tutorial: How to Unlock iPhone 4 and iPhone 3GS on iOS 5 Using Redsn0w 0.9.9b5 by creating and installing Custom Firmware for iOS 5
Step 1: So Now, Open Redsn0w 0.9.9b5 and Click "Extras"
Step 2: Now Click Custon IPSW and browse for iOS 5 IPSW File which you download above.
Remember Redsnn0w will create the custom IPSW firmware in the same folder where iOS 5 is download with a name NO_BB_ IPSW.
Step 3: Once Redsn0w finishes creating Custom iOS 5. Open iTunes and go to your iPhone tab. Instead of hitting “Restore” in iTunes hold down shift(win) or option(mac) and then hit restore. A dialog window will open up again asking you to select your firmware. At this point select the CUSTOM iOS5 firmware you created. It is extremely important that you select the correct firmware. The custom firmware will begin with “NO_BB”
So Once iTunes finished installing iOS 5 on your iPhone 4 or iPhone 3GS, Which will now be running Custom iOS 5 with Older Baseband which will allow you to unlock it with ultrasn0w or Gevey Sim.
Note: iPhone Dev Team will update Ultrasn0w today, which will allow you to Unlock iPhone 4 and iPhone 3GS, So stay Tuned we'll update you once they released the new Ultrasn0w so you will then be able to unlock your iPhone 4 and iPhone 3GS.
You can also Follow:
Guide: How to Tethered Jailbreak iOS 5 on iPhone, iPod Touch and iPad Using Redsn0w [Tutorial][Download]
Update: So now you've updated to iOS 5 preserving your Baseband. And Ultrasn0w 1.2.4 is now released to Unlock your iPhone 4 and iPhone 3GS, So just follow the Guide here to Unlock your iPhone 4 and iPhone 3GS.
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