Here is a text and video guide on how to jailbreak iOS 5.0.1 using RedSn0w 0.9.9b7.
Step 1:
Download iOS 5.0.1 from our downloads page (you need to be a registered Apple Developer for the firmware to activate).
Step 2:
Open RedSn0w 0.9.9b8 (download here) and select Extras > Select IPSW > and point it to the iOS 5.0.1 firmware.
Step 3:
Go back to the main screen of RedSn0w and click Jailbreak. Then follow these steps:
a. Hold down the power button for 3 seconds
b. Continue holding the power button and then start holding the home button at the same time. HOLD BOTH for 10 seconds
c. Let go of the power button and continue holding home button for 20 seconds
Step 4:
You will get the white Cydia icon, here is how to fix that.
Congratulations, you are now jailbroken on the new iOS 5.0.1 firmware!