iOS4 on 3GS - No WiFi

Same problem. Upgrade to the new IOS 4.2.1 and no wireless now. I'm an avid iPhone user and it has to be a software problem. Just too weird working one moment... Upgrade and nothing. Come on Apple fix this issue. Thank goodness my wife's contract is up in a couple of months so we can get her a new phone. But she's making me crazy about it anyway. Crossing my fingers for a fix! Oh btw did all the usual network reset, phone wipe etc.. All didn't work. Bleh.....

Here is my take on the problem, as I am experiencing some issues with iOS4.2.1.
My wife has a 3GS, I have an iPhone 4, and my son an iPad. We have an Airport Extreme on the first floor and another one on the second floor.
When we were on iOS 4.1 on both iPhones and iOS3.2 on the iPad we had reliable WiFi "n" thru WPA2. Never had issues getting disconnected from either one of my routers.
Now, for some strange reason, one of my iOS devices or maybe all of them (not sure which one) crashes my downstairs router big time. The router no longer connects to either iPhone nor iPad nor any computer in the house. In fact, the phones or iPad will refuse to connect to my other Airport Extreme as well; however, my laptop will connect to my other AE just fine.
The router's WiFi connection will stay dead for a while as well as iPhones and iPad. Reboots won't work either. After a few hours, everything will come back by itself, truly magical. I am not sure what is happening, but I think devices with iOS 4.2.1 are creating too much interference and the phone and router are simply shutting down their WiFi radio to prevent possible hardware damage. Its only a guess, but it surely looks like iOS4.2.1 has still problems with its WiFi implementation. I hope Apple fixes this problem soon because it is very annoying.

I have the same problem. I just upgraded to the new IOS 4.2.1 on my iPhone 3GS and now its bye-bye internet access. My case is a bit odd that if I go to the "Wi-Fi" networks it shows that I am connected to my Wifi, but when I try to open my Safari browser I get a pop-up that says "Cannot Open Page", that "its not connected to the Internet". Apple, please fix this. Without internet/Wifi, the iPhone is pretty much like any other phone.

Just for reference: there is a non-sanctioned way to downgrade the firmware from 4.2.1 back to 4.0.1 or 4.0. I have (allegedly) tried these with my botched-WiFi 3GS on 4.2.1, back down to 4.0.1, but even downgraded to 4.0.1, I still have no luck seeing access points which are visible from other working iPhones on 4.2.1.

Interestingly, my wife's iPhone 3GS was replaced due to a hardware issue about 8-9 months after we both got the original iPhone 3GS around its release date. I still have the older 3GS hardware -- and I'm the only one with WiFi issues after the upgrade to 4.2.1.

In my opinion the problem seems to be the baseband that is why some of you that downgrade the OS still have the same problem, downgrading the OS let say from 4.1 back to 3.1.3 does not downgrade the firmware for the baseband. I have tried all suggestions on diferent forums But nothing has worked i have even gone back to 3.1.3 were i had no problems with my 3gs and still nothing I Even went as far and replaced the wifi antenna on my iphone so the only thing left was to downgrade the baseband and because i can't do that i'm stuck with low wifi signal i basically need to be 30cm away from my wifi to connect. I have no doubt in my mind that apple's 4.1 Update killed my wifi and my Fathers 3g after 4.0 update killed the battery it won't last more than 4 hours of non use just sitting there on standby. Mi wifes phone just shuts down in the middle of a conversation. I also have no doubt in my mind anymore that apple has done this on purpose to force us to by new phones. I love my iphone and i will upgrade to the iphone 4 but i will never ever use one of their upgrades ever again i have never jailbroken my phone but from now on i will jailbreak my phone or my friends and any strangers phones for free and i will never pay for an application ever aggain, i will keep the iphone 4 for ever or untill it falls to pieces. Apple will make money of me one more time and that is it they will never see one more cent out of me.