Bluetooth devices keep disconnecting from iPhone after iOS 17.2 Update

I had a similar issue with my current iPhone 12 Mini / iOS 17, frequently losing its Bluetooth connection to my car stereo. Through much trial and error, I found that allowing the Alexa app to use Bluetooth was the culprit, even when the app is closed. If your iPhone loses its connection to a car stereo or wireless headphones while you're out and about, and you have the Alexa app installed, I encourage you to try disabling its Bluetooth privilege (Settings --> Privacy & Security --> Bluetooth), reboot your phone, and see if that fixes it for you. A few more details:

• Car is a 2010 Mazda 3, stereo is a factory-installed premium Bose system
• I previously had iPhones 6, 8, 10, & 14 connect to the same car stereo over the years with no problems, though I can't say for sure if I had the Alexa app on any prior to the 14. I've since re-tested the 14 / iOS 17 in the car, with the Alexa app installed and allowed to use Bluetooth. The problem doesn't happen.
• Early on, I went to the Apple Store Genius Bar and the guy immediately suspected my Nord VPN app. We agreed to delete it, but couldn't test it until I got home where my car was. It didn't fix the problem.
• The problem is more pronounced when driving on residential streets, when I'm passing in and out of range of other bluetooth-enabled devices in peoples' homes. With Settings --> Bluetooth screen open, I could see unfamiliar devices appear & disappear - seemed like mostly smart TVs and wireless speakers, and would frequently coincide with the connection to my car stereo dropping out, at which point the 'Mazda' entry in the My Devices list goes from 'Connected' to 'Not Connected', and then self-recovers about 15 seconds later. When driving on the highway, the problem would almost never occur, suggesting that passing in and out of range of other motorists' phones and bluetooth-capable car stereos, isn't an issue. On a few occasions when it did happen on the highway, I'd glance to the side and see a residential neighborhood less than 100 feet away.
• The problem also happens with my Airpods Pro while walking through residential streets, though the effect is not as pronounced. It would act more like a music playback hiccup, and would remain displayed as 'Connected' throughout, whereas with the car stereo, it's more like a full-on vomit. The problem is reduced when riding the bus: further away from the sidewalk & houses, and further supports that other passengers' phones, headphones, laptops etc don't trigger the issue. The problem has never happened while riding the subway.
• I think that the Alexa app needs Bluetooth only when you're adding a new smart device to your home. If that's true, then it should be fine to leave it disabled and only allow it when you're doing that, then disable it again. That's what I'm doing now, and it's NBD.
• Why this affects my iPhone 12 mini but not the 14, remains a mystery. Smaller form-factor, different bluetooth hardware, different model-specific code running inside the Alexa app? ¯\_(ツ)_/¯

If none of the above solves or explains it for you, I suggest resetting all Location & Privacy settings to default. I did this by making like I was going to sell my phone: go to Settings --> General --> Transfer or Reset iPhone --> Reset --> Reset Location & Privacy. All your apps, data, and other preferences should remain intact. Then reboot phone. If the problem goes away, then you'll be started on the same journey that I took, and can re-enable Bluetooth & Location settings as-needed in order for your apps to work properly, but always make a note of what you did and when, so if the problem re-appears, you'll have a trail of evidence to identify the offending app. If things get really fouled, you can always restore from a previous iCloud backup.

Regarding observations that the problem first appeared with an iOS 17 update. Is it possible that it wasn't the iOS update itself, but by updating, you opened the door to newer versions of some of your existing apps, and one of them (which may've auto-updated right after the iOS update without you realizing it), introduced a new bug and is the true culprit? Just a thought to keep in mind. Hope this helps others.