The iPhone Team has released update of RedSn0w 0.9.8 b3 to jailbreak iPhone 4, 3GS, iPod Touch 4, 3G and iPad 1 on iOS 4.3.4 which is a tethered jailbreak.
It is already known that iOS 4.3.4 update does not include any new features and only fixes the exploit which has been used by JailbreakMe 3.0, so it is not necessary to upgrade to iOS 4.3.4 as its jailbreak is only tethered at the moment.
How to Jailbreak iPhone 4, 3GS iOS 4.3.4 with RedSn0w
Restore iOS 4.3.4 on your iDevice if that’s not running over iOS 4.3.4
Run Redsn0w, click on Browse button to select the download iOS 4.3.4 firmware file and let it recognize your IPSW and then click on Next
Check mark the box followed by Install Cydia and click Next
Make it sure that your iDevice is Turned OFF and Plugged in to your system and then click Next
Follow the on screen instructions to put your iDevice into DFU Mode
When your iDevice will get enter into DFU mode successfully, RedSn0w will start tethered jailbreaking process
On completion you will have your jailbroken iDevice over iOS 4.3.4
Run Redsn0w and point it to IPSW file
Select Just boot tethered right now option and go next