Here's a method to recover my JB:
1 - Download latest redsn0w 0.9.6rc16 - see below
2 - Download iOS 4.2.1 for iphone 3G
3 - ensure you edit the hosts file and add aime "126.96.36.199 gs.apple.com" or otherwise you will get error iTunes error measage "1015"
4 - Run the Redsn0w and follow the process
5 - Once Jailbroken, install ultrasn0w by first installing its repo.
Download Redsn0w 0.9.6rc16
These are direct downloads links:
Direct Download Links for iOS 4.2.1
NOTE: I am very lucky that this is iPhone 3G because the final supported iOS for iPhone 3G is iOS 4.2.1 and its baseband is 06.15.00. This baseband is still being supported by the Ultrasn0w.