Apple officially acknowledged that "there's a problem with the iPhone 4's reception and states the fix is on its way."
"Upon investigation, we were stunned to find that the formula we use to calculate how many bars of signal strength to display is totally wrong. Our formula, in many instances, mistakenly displays 2 more bars than it should for a given signal strength. For e.g., we sometimes display 4 bars when we should be displaying as few as 2 bars. Users observing a drop of several bars when they grip their iPhone in a certain way are most likely in an area with very weak signal strength, but they don't know it because we'e erroneously displaying 4 or 5 bars. Their big drop in bars is because their high bars were never real in the first place."
Full Email: Apple Letter