If you want to unlock your phone to work with other carriers you need to use Pwnage tool for jailbreaking your idevice that preserves your baseband. This jailbreak is a bit complicated as compared to the other where you don’t care for unlocking. If you don’t want to unlock your phone to work on other phone carriers then you can follow this procedure.
Also you have to note that Pwnage Tool is for mac users only and this jail break works for iPhone 4/3GS, iPod Touch 4G/3G and iPad 1 running on 5.0.1
Following are the steps you need to follow for doing jail break:
1. Download PwnageTool 5.0.1 by visiting this link.
2. Now select your device, Pwnage tool will find your firmware automatically and will go in expert meeting.
Note: If for some reason device doesn’t go into expert mode, download your firmware manually from this page.
3. Wait for PwnageTool to build the firmware for your device, note the location of saved file.
4. Follow instructions to enter the DFU mode.
5. Now open iTunes, select your device, hold alt and click restore, select the newly made ipsw, and click ok.
6. Your device will be jailbroken.
7. Follow this article to unlock your device using UltraSn0w.