I also get this reception issue with my iPhone 4, but also noticed the issue with my iPhone 3GS when upgraded to iOS4.
Seems software related to me. And there is logic to suggest it is.
Holding a phone always drops the reception somewhat, in most cases, not enough to really notice. So to me, it sounds like the software is not coping well if with lose in signal, and is either trying to conteract it (and failing), so something is bugging and causing the signal to show as "Searching..." when really it still has reception.
Now, I could be wrong, but I would imagine that the phone would use the signal status to identify if a call can be made or continued. And if this is showing incorrectly, this is what could be causing the dropped calls. (The phone has signal, but as soon as it gets confused and shows "Searching..." it says, well cut all communication).
Again, this is only my opinion of what could be happening (coming from a software developers point of view).
What bugs me is the lack of information surround this issue.
Apple have NOT, and I repeat
NOT!!!, release an official statement yet regarding the issue. So everyone stating that "HOLD IT DIFFERENTLY" is the official response from Apple actually makes me a little mad. A mass media frenzy has erupted over the fact that some random blogger claims to have received a response from Steve Jobs ( The CEO of APPLE ) stating that he should hold his phone better.
So, all this media fuss, is as far as I am concerned is total... RUBBISH (edited to avoid someone else editing it for me).
But also, the lack of info from Apple is not on. If I was the CEO of a massive company that had just released a product with a software bug, or potential hardware flaw, I would want to get my side of the story out there ASAP, especially with the media attention at the moment. So from a customer point of view, it looks like something is being covered up.
Don't get me wrong, I am not saying this is a guarenteed software fault, but I hope it is.
And to everyone that is being a bit too quick to judge, lets wait for someone official to come from Apple because we slate their resolution.