iPhone 4/iOS 4 bluetooth muffled on other end

I didn't restore my phone from backup. I set it up as a new phone to test and still have the same problem. Thanks for the update. I hope they get this fixed soon. It's driving me crazy.

Similar problem, if BT headset (Plantronics 975) connected when iPhone 4 is idle, calls seem to be clear both ways, BUT if headset loses connection and needs to re-make during call, or if headset initiates connection after start of call, the caller sounds fine (slightest hiss of static in background, but does not interfere with understanding caller), but caller reports that my audio is awful, "fishbowl" or "intermittently muffled".
This flaw/bug is consistent, verified 5 times in 5 different calls, in 3 different locations, to 3 different callers.
Symptoms were not apparent when using this headset with iPhone 3GS, can't speak to iOS4 on 3GS, did not have long enough to notice problem before switching to iPhone 4.
Symptoms suggest software bug in BT manager, hopefully Apple will fix with 4.1 (hint, hint, Apple...)

I tried all of the above, nothing works.
I spent hours with Apple support to try to fix this issues and until now - nothing.

I lost all of my information by restoring my iPhone to factory defaults (as new iPhone) and the Bluetooth problems did not disappear.
Apple store employee suggested me to return the phone and get a 3Gs -- don't you think it's funny?

Same problems, I called Apple tech support and they suggested I leave feedback on the website apple.com/support/feedback so I did. I hope this is as simple as a software update and is not a hardware issue. Also they need to HURRY up is really ***** no having bluetooth!

Having the same problem here with a Plantronics Voyager Pro & iPhone 4. Was working fine with my previous iPhone 3GS w/ iPhone OS 3.1.3. Everyone on the other end of my calls says I sound muffled. Off to file bug with Apple...

Submitted a bug to Apple on this, radar # 8163188.

Just got back from the Apple Store. Tech Support had set up a Genius Bar appointment with my local retail store to confirm the problem with my Plantronics Voyager Pro. We tried pairing my PVPro with another iPhone 4 and got the same results.

The Apple Store guys were very helpful and took pains to document my case. They indicated that iOS 4.1 is expected within the week. Let's keep our fingers crossed!

UPDATE: 7/7/2010: Did soft reset, hard reset and complete restore. Incoming calls still muffled to incoming caller, bluetooth cuts in and out while paired, sound quality poor. Apple tech called me back from yesterday and had no answers, then got disconnected and he has not called back. Trouble ticket still open.
Ticket # 3378496148

Message was edited by: Captual

Message was edited by: Captual

Just wanted to add a followup to my original post. This problem magically disappear for 3 days. But suddenly came back today. Was on the phone today on bluetooth headset for 3 hours, with no problems. Got a call an hour later and the problem had returned with a vengeance. I wanna wait to see if they will fix this with the upcoming patch. But have a sneaky feeling it will come after its too late to return the phone. I would go back to my 3G, but it has iOS4 on it too, so it has the same problem.

Thinking of just returning my phone and getting a dumb phone. At least it will make calls, and I can save $30 a month on data plan. I can always use my 3G as an iPod Touch.

I bought a Plantronics Backbeat 903 the same day I bought my iPhone 4 and it works great with the iPhone, as long as it's already paired with it before the call gets connected. If I try to connect the bluetooth headset while on a call, it sounds as if I'm underwater to the other caller. So I tapped the speaker phone button on the iPhone and then tapped the BT headset button after that, and it sounded SO MUCH BETTER. Maybe you guys could try that.

I also just got a Voyager Pro today from Amazon that WON'T EVEN PAIR with my iPhone 4. They look so much alike, yet one pairs fine and the other one won't pair at all!

I'm having the same problem. I just got my 32GB iPhone 4 and all my BT connections are now awful. Call quality has gone down the toilet for both the calling party and me. My audio quality in my car is particularly bad, lots of static and snap-crackle-pop. Both connections were crystal clear with my 3G. My BT headset is also dropping calls every 5 minutes or so. VERY ANNOYING. I will be taking this handset to the Apple store soon if it doesn't magically fix itself.

Did you try my suggestion of switching it to the speakerphone while on a call and then back to the headset?

I have the exact same issue reported by all the people I called.
At first I thought it has something to do with my Plantronics Discovery 925, so yesterday I went out and bought a Jawbone Icon, and the issue remains.
Basically, people think that I talk out of a toilet bowl, and can barely hear a thing I say.

Switching between speaker phone and back to BT does not solve the problem for me at all.

Really hope that it is something within iOS4, not hardware issue.

I do have a casing, so I don't think BT antenna is affected in anyway.

WHERE WE STAND:
1. Iphone 4 has bluetooth Muffled sound to Incoming calling party, outgoing calls
are for most part ok. When connected, quality and range of audio is very
reduced with minimal performance. Bluetooth device drops on and off while
paired.
Trouble pairing some devices that work fine with other phones and cars. Stereo
headphone devices range, quality very reduced for various makes/models.
2. Problem appears to NOT be any single make/model of bluetooth device.

3. Attempted Fixes:
A) Soft reset of iPhone4 under settings....No help.
B) Hard reset of iPhone4 -Holding Home and power button at same time..NO Help.
C) Complete Reset of iPhone4 with iTunes....No Help.
D) Switching bluetooth On and Off while on call....No Help.
E) Removing bluetooth device on iPhone (ignore this device) and re-pairing
device as new....No Help.
D) Switching from speaker to bluetooth to iPhone to bluetooth....No Help.
E) Installing insulted iPhone cover, sleeve....No Help.
F) Contacting Apple support with trouble ticket MANY Times....NO HELP.

UPDATE::PROBLEM SOLVED::

The answer couldn't be easier. Back up you phone, then reinstall iOS4. The problem will still be there. Pair up the BT headset in question and then make an appointment at your local Apple store (apologies to those that don't live close to one). Take your phone and BT headset into the store and display the problem. They'll confirm that your headset works with a new iPhone and then they'll hand you the new iPhone and wish you a pleasant day.

This is clearly a known issue otherwise they would have spent more time looking into my problem. It took me a total of less than 30 minutes.