now my phone has 4.1 firmware install and Im not even able to install custom firmware using iTunes......it give me error 1604.......
if I'll jailbreak my iPhone using redsn0w 0.9.4, then my phone icon will be again gone and the icon of cydia will turn white...
Yeow and I have told you already what to do. You can follow his method to downgrade or you can do what I said earlier.
1. Jailbreak your iphone at 4.1, you will lose your phone icon and cydia will be white, dont worry about it.
2. Now that you are jailbroken you can install that custom firmware without getting that 1604 error.
3. Once you install that custom firmware your phone icon will be back and cydia will be fine.