This new “Custom IPSW” feature works for iPhone 4 and iPhone 3GS for now but it will be expanded later on. Redsn0w 0.9.9 b5 is currently available for Mac OS only but a Windows version will be released very soon.
Release Notes of Redsn0w 0.9.9b5:

With today’s official iOS5 release, redsn0w has been updated to 0.9.9b5 to include the public URLs for the IPSW files. This way, first-time iOS5 jailbreakers don’t need to supply the IPSW file manually. It’s still a tethered jailbreak on all except the old-bootrom iPhone3GS, and it doesn’t apply to iPad2 or the upcoming iPhone4S.



Because the jailbreak is currently only tethered for most devices, we’re not going to release a new PwnageTool yet. Instead, we’ve decided to build some of PwnageTool’s functionality into redsn0w (since you need redsn0w to “Just boot tethered” on every power cycle anyway). The new “Custom IPSW” button on the Extras screen will create a custom IPSW without the baseband update for 4.3.3 or 5.0gm (iPhone3GS and iPhone4 only, for now). Remember to NOT accidentally restore to the stock IPSW after you create the custom one! The custom one begins with NO_BB_ (for “no baseband”). On Mac iTunes, you select an IPSW by holding down the Option key while clicking “Restore”.



You must enter “Pwned DFU” mode before trying to use the NO_BB_ IPSW with iTunes (and your hosts file cannot be pointing to Cydia’s servers due to the new blob nonce mechanism they’re using in iOS5).



Version 0.9.9b5 is available only for Mac for now, until we can do more testing on the Windows version of “Custom IPSW”.
We’re currently working on a normal compatibility update for existing ultrasn0w unlockers. After that we’ll try to fix the iBooks issue on jailbroken iOS5.

Remember: If you rely on unlock DO NOT jailbreak directly using redsn0w, you need to create a custom IPSW and restore it manually in order to preserve baseband. On windows you can use Sn0wbreeze 2.8b8 to create (pre-jailbroken) IPSW file with baseband preserved.
How To Jailbreak With Redsn0w 0.9.9b5:


Step 1: Connect your iPhone to the computer and launch iTunes.
Step 2: Select your iPhone from the list of devices on the left. Now hold down Option and click the Restore button. Restore is preferred as it won’t create any wasted space on your iPhone.
(You can skip this step if iOS 5 is already installed on your device)

Step 3: Download (link) and Launch the redsn0w 0.9.9b5 for Mac OS

Step 4: Once RedSn0w opens click the Jailbreak button
Step 5: Plug your iPhone into the computer and make sure its OFF then click the Next button. RedSn0w will now guide you through the steps to get into DFU mode.

• Hold down both the Home button and the Power button for 10 seconds.

• Release the Power button and continue holding the Home button until RedSn0w detects the device.

Your iPhone will now reboot

Step 6: RedSn0w will now prepare the jailbreak data

Step 7: Select Cydia from the list of options and click Next.
Your iPhone will now be rebooted again and RedSn0w will begin uploading the new RAM Disk and Kernel.


Step 8: Once this is complete you will be notified that RedSn0w is done. When your iPhone finishes rebooting (5 minutes or so) it will be jailbroken and running iOS 5 final version.

Booting In Tethered Mode:
Once you have jailbroken you will need to rerun redsn0w to boot tethered.
Step 1: From the main RedSn0w menu click the Extras button.

Step 2: Select Just boot from the Extras menu to just boot tethered.

And that was it, happy jailbreaking! If you face any problem during this process feel free to ask for any kind of help.