Thanks to pod2g and the iPhone Dev-Team it’s now possible to jailbreak the iPhone 4 and all models of the Phone 3GS untethered. Although iPhone 4S and iPad 2 owners are still waiting for an A5 jailbreak, all iOS devices running iOS 5.0.1 with A4 hardware can now be jailbroken untethered.
This includes the original iPad, iPod touch 3G and iPod touch 4G.

Using redsn0w to jailbreak is a straightforward process, and will install the Cydia app store on your device. This opens up a whole new world of tweaks and apps to improve your iPhone experience and customize operation. Be sure that before you proceed with the instructions, you have installed the iOS 5.0.1 firmware update.
Attenshun iPhone, iPad and iPod users! The wait is over! The iOS 5 untethered jailbreak is now available for A4-based iPhone, iPad and iPod using Redsnow.

You just need to follow the following steps and enjoy your non-authorized apps right away:
1. Download Redsn0w for Mac and Windows.
2. Run Redsn0w, click on “Jailbreak” and check “Install Cydia”. Follow the instructions on the screen.
3. Wait and be done.
That simple. If you have an unlocked iPhone you should choose the custom IPSW option to preserve it. Like always, if you do this and things break, we’re not responsible for it (but don’t worry, it should work—and you can always go back to the original Apple firmware).
Sadly, this will not work with A5 devices: the iPhone 4s and iPad 2. [Redsn0w for Mac and Redsn0w for PC via Redmond Pie]
[Thanks: http://gizmodo.com]