This is so far the only process to safely update your iPhone 3GS or 4 in 5.0 without updating baseband, and jailbreak it. Then you could unlock using UltraSn0w or Gevey SIM card. Please note this jailbreak is tethered for every device but the old bootrom iPhone 3GS which means you will need to connect your device to the computer each time you reboot. Also, it may be prudent to save your SHSH Blobs by following this tutorial before continuing if you haven’t already.
Create a folder on your desktop called Pwnage
Once you have jailbroken you will need to rerun redsn0w to boot tethered.