Im having the exact same problem it seems. My iphone was running 4.2.1 and then i followed these instructions: Jailbreak iPhone 4 iOS 4.2.1 with PwnageTool 4.2 & Unlock with Ultrasn0w [Mac] | Gadgets DNA

Now i cant get off the recovery screen.

Octal, how can i find the host file? Im on a mac and havent been able to figure out. Should that fix the problem^

Also, somebody mentioned that I could just upgrade to 4.3. If i did that, would it erase the jailbreak (which didnt seem to work anyway).

Thanks for the help guys.