I have noticed my 3GS experiencing very poor signal strength as compared to my wife's 3G. It appears to be worse when I am holding the phone. If I lay it down or hold it by my thumb and finger from the top and bottom of the phone (back of phone not covered by my hand) signal strength seems a lot better. Holding it and surfing the net over wifi, my signal bars will start dropping, then start searching for a signal, then go to no service as long as I'm holding. After laying it down, service will be restored.
This behavior leads me to believe it is something with the phone and that a software upgrade will not fix the problem.
Sorry about the slow response - been away for Holiday and have avoided the laptop!
So, my original 3GS was swapped out (genius tested and noted a "battery" issue).
New phone seems to have better and more consistent signal, fewer dropped calls, and better battery life. I am in the habit of resetting the phone now and then, for whatever that is worth.
Still have noted it gets a bit hot. In fact, while listening to tunes on the beach, the unit shut off after about 50 minutes due to temperature! Now it was hot out (83 F) but unit was not in direct sunlight. Seems a bit odd, since I have used 2G and 3G phones for many hours on the beach without ever having it time out due to heat.
I just have an Iphone 3G but I got the software update 3.0 for it and I'm having the same sort of problems (Poor battery life, and running hot) although my signal is still fine. I really hope Apple will fix this somehow, otherwise I may be forced to get another phone, this battery life is ridiculous.