yeh don't mock me coz i am new but i am trying to do the same with my ipod 2g on the same firmware and i found out that the 4.2.1 can easily be jailbroken but Cydia is not yet compatible. The only other option is to downgrade. I have some usefull sites here.

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hope this helps. Downgrading will clear your ipod so be sure to sync before to backup your files on itunes.

When you have downgraded just go to Jailbreakme.com on youir ipod. It is the easiest jb method. Just slide to jailbreak