You can go to 4.2.1 with a custom firmware made with pwnage tool if you want pt preserve baseband so that you can unlock. If you dont need to unlock then you can just update to 4.2.1 then use redsnow 0.9.6b6 to jailbreak.
All you have to do is restore to 4.2.1. Then you can restore your backup from your old 4.1 backup. Then you can jailbreak with redsnow 0.9.6b6. just select the install cydia option.
If you don't need to unlock then you don't have to worry with the iPad baseband thing. That is just for unlockers. Just restore to regular 4.2.1 and then use redsnow to install cydia.
The benefit would be if you plan to unlock in the future then not upgrading your baseband would help you. If you go to regular 4.2.1 that baseband cannot be unlocked meaning if you did want to unlock then you would have to do the ipad baseband thing. If you never plan to unlock though it wont affect you at all.