4.2.1 is latest developement environment from RIM for now. However it has poor editor and code navigation features and no refactoring features at all. Therefore a lot of people use NetBeans, IDEA or Eclipce for this and use JDE only for debugging purposes.
About MDS - not sure. Do you really need it? As far as I know, it is possible to use MDS from previous JDE versions with 4.2.x JDE.