The Chronic Dev-Team has released Greenpois0n, their utility for jailbreaking the iPhone, iPad, and iPod touch on iOS 4.1.
After much controversy, the tool has been updated to use the bootrom exploit found by Geohot.
Unfortunately, only a Windows version is currently available; however, a mac version and ipt2g support are coming soon.
From the many comments and our own experience, Greenpois0n does not seem to be installing Cydia at the moment. You may want to hold off until this is fixed.
RC3 seems to fix the issue for us.