I would like to update this thread with some information from other sources where I am seeking an answer; hope this will benefit someone.
I posted a similar to question on the YouTube link:
Question :- "Hi emac, I have an iPhone 3GS (jailbroken + unlocked), which is currently on 3.1.3(7E18) version and the modem firmware is 05.12.01. If I follow this video, I can upgrade to 4.2.1; My Cydia shows SHSH Blobs for 4.0, 4.0.1, 4.0.2, 4.1, 4.2.1r1, 5.1.1 and 6.0.1. Can you please let me know which stable version I can upgrade to?
Thanks & regards,
Answer :- "The latest iOS for your iPhone is 6.0.1. This is not the right time to update your iPhone 3GS since there is no untethered jail break for 6.0.1. If you don't care about jailbreak then get your iPhone permanently unlocked first and then update to 6.0.1. If you need jailbreak then wait for next available untether jailbreak for 6.0.1. And if your iPhone 3GS is old bottom then you can freely update to 6.0.1 using iTunes. Then jailbreak it using redsnow 0.9.15b3 and then unlock using Ultrasn0w. "
I will update this thread once I am able to follow an approach.