iphone: submit app with iOS 5 and Xcode 4.2?

You should absolutely never install beta builds SDKs as your primary SDK and version of XCode. Always keep the current install under /Developer (or wherever you choose) and install the beta in some other location (/iOS5Beta as an example). With this, when the new beta versions of XCode and the SDK arrive, you can uninstall the /iOS5Beta version and install the new one (may not have to uninstall, but just a point).

This allows you to beta test, then under the /Developer install do your regular development.

When the GM is out, you install that under /Developer and go.

You never submit Apps to Apple with beta builds of XCode and the SDKs.

Every readme file I remember for beta versions of Xcode have said they can't be used for submission. You have to use a GA version of Xcode to submit apps.