Does iOS 4.2.1, the latest release at the time of this question, support WebGL?
Not at this point, no. WebKit, that which Safari for Mac OS and iOS are both based on, is supposed to support WebGL but I have yet to be able to get it work properly on Mac OS 10.6, much less iOS. I get the impression the whole thing is too new (relatively) for proper support.
Looks like its only in Webkit, and even then you have to enable it: More info: http://webkit.org/blog/603/webgl-now-available-in-webkit-nightlies/
I would not get your hopes up of iOs ever supporting WebGL. Not only because exposing the video drivers to untrusted parties poses a security risk. It would also give game developers a way to circumvent the app store for distributing games. Same reason you will never see the flash support extend beyond anything but video.