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Untethered jailbreak and unlock iphone 3GS with baseband 05.16.05 on iOS 5.0.1

As of now there is no Untethered jailbreak is available for iPhone 3GS with baseband 05.16.05. The only option is to upgrade the baseband for your phone to version 06.15.00 with the help of Rensn0w utility  . Please beware that after you install the new baseband you will not be able to downgrade the iPhone to lower baseband and also you will not be able to upgrade your iOS from iTunes.
So here is the video which tells you how to to do Untethered jailbreak and unlock iPhone 3GS with baseband 06.16.05 on iOS 5:
Untethered jailbreak and unlock iPhone 3GS with baseband 06.16.05
Links to download required files:
1. Download iOS 5.0.1 firmware from here.
2. Download  redsn0w 0.9.9b9d for Windows or redsn0w 0.9.9b9d for Mac
Above video shows how to install iPad baseband 06.15.00 , install iOS 5.0 and jailbreak using old version of redsn0w utility. You can use the latest version of that utility instead of the old version which worked perfectly for me.
I hope it will work for you!!
For more detailed see this : How To: Jailbreak iOS 5.0.1 On iPhone 4, iPhone 3GS With RedSn0w 0.9.9b9

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