I seem to be having the issue with the bluetooth dropping the signal, but not yet with the muffled sound. This is likey due to my giving up on bluetooth due to how bad the connection issue is with my iPhone 4. My iPhone is paired to both a JawBone and the U-Connect in my Jeep, and neither can keep the bluetooth connection for more than 5 minutes.
This is particularly aggravating when the iPhone is in a cradle in the car and the bluetooth drops. I am forced to grab the phone, switch the phone from U-Connect to iPhone, and then resume the conversation. Worse yet is when the bluetooth reconnects, and there is a delay while it switches the audio signals between the phone and the car, causing a 5 second gap in the conversation.
As such, I have stopped using bluetooth on my iPhone. Perhaps I'll now make a trip to the Apple Store to see about a replacement...