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iH8sn0w has released Sn0wbreeze 2.6.1, which will allow Verizon iPhone 4 users to jailbreak their iPhone on iOS 4.2.7, which was released by Apple couple of weeks back.
Sn0wbreeze 2.6, which was released last week already allows GSM iPhone users who want to jailbreak and also unlock their iPhone to update their iPhone with a pre-jailbroken iOS 4.3.2 firmware while preserving the baseband from getting upgraded so that it can be unlocked using Ultrasn0w.

iH8sn0w has provided the following information in the release notes:

Well, after i0n1c released his untether exploit for 4.3.1, Apple shortly pushed out 4.3.2 AND 4.2.7. i0n1c's payload was ported over to 4.3.2 in a short period of time but not 4.2.7. This made Verizon users very frustrated.

I originally ordered a Verizon iPhone 4 for my upcoming SHSH blobs dumper. Then I + many others on twitter realized that an untether was not available for 4.2.7. Over the past few weeks, I've been sick and didn't do much, but today I was finally able to get the strength to work on this Verizon untether. Since i0n1c's payload is not easily reversible, I went to previous exploits.

After trying, pod2g's + posixninja's kernel exploit for 4.2.x is STILL in

4.2.7! After some more work, I managed to get this thing untethered!

So, this new release includes that new payload to untether + jailbreak 4.2.7.

So Sn0wbreeze 2.6.1 now supports an untethered jailbreak for iOS 4.3.2, iOS 4.2.7 and supports the following devices:

• GSM Phone 4, Verizon iPhone 4, iPhone 3GS
• iPod touch 4G, iPod Touch 3G
• iPad 1

Sn0wbreeze 2.6 doesn't support iPad 2 yet. Sn0wbreeze 2.6.1 also allows users to enable four and five finger multitouch gestures, which are only available to developers of iOS developer program.
iPad, iPod Touch and iPhone users who don't care about unlocking are better off using Redsn0w as one doesn't need to preserve baseband like iPhone users.

You can download Sn0wbreeze 2.6.1 from Here.