Many people complained that my method for activating is very complicated so i had to think about something more simpler than it and something popped in my mind about the custom bundle option in redsn0w so i made one which simplifies the whole process.
What you will need:
iTunes 10.5 Beta
redsn0w 0.9.8b1 ( Windows | Mac )
iOS5.0b1Bundle: Ziddu | Mediafire
1. Install iTunes 10.5
2. Put your device in DFU mode
3. in iTunes press shift+restore(Windows)|option+restore(Mac)
4. After process completes (you will see iPhone written on your lockscreen) power off, put your device in DFU mode/
5. Run redsn0w and browse for the iOS 5 firmware, press next and again next and again next and wait for your iphone to jailbreak(process is finished when the iPhone reboots).
5. After this put your device in DFU mode again run redsn0w and when you reach the point in redsn0w where you can select install cydia or install custom bundle or boot tethered etc. - select install custom bundle and browse for the tar archive with the bundle.
6. Boot tethered with redsn0w and activate normally with itunes. It will activate successfully and you will get service. All left to do is to complete the setup on your iPhone. It will ask you for language, country,operator (by the time it ask for operator i got service so i just pressed next), wifi, iCloud, and iTunes account.
In the bundle there is the modified SystemVersion.plist which replaces the original one and makes itunes think that final firmware is used so it does not require UDID registration. The only problem (not much of a problem) is that jailbreak is still tethered and every time you reboot the phone you need to boot tethered in order to use your jailbroken apps and safari.
For experienced user the guide can look lihe this:
1. Install iOS5b1 and jailbreak it.
2. Install the custom bundle, then activate in iTunes.
Looks a lot simpler aint it ?
Edit: Added Mediafire mirror for the bundle since many people have problem downloading it.