Touch Screen Over sensitive

Yes, you've got the Proximity Sensor problem. I believe the 4.1 update was supposed to improve the situation.

There are LOTS of reports of this, so I'd try googling "iphone 4 proximity sensor" and see if anything is useful if the 4.1 update doesn't help. Or searching this forum.

Yes, iOS 4.1 fixes the proximity sensor issue dramatically! My assumption was, since the proximity sensor is a different model on the iPhone 4, that it may have been able to detect further as a hardware feature, so Apple decreased the software output power of the proximity sensor to reduce radiation on the iPhone 4. This attempt didn't work so they had to boost the output levels. But that's just my assumption, which seems logical.

My opinion is two-fold.

1) They threw everything they learned with 3Gs' Proximity Sensor design out the door to place the face-time camera in the phone (BAD DECISION).
2) They changed the sensitivity of the touchscreen surface, increasing it. You almost don't have to make physical contact on touchscreen to register a touch which I believe is playing into the Prox. sensor issue.

You take both of these tied together along with probably some flaky logic and you get a much degraded "Phone" experience by the end-user and this is not taking into account if any component or quality control is bad, just sheer discounting of previous techniques proven on older designs.

If you don't take risks, you never know what might be innovative. Something I like about Apple is that they're leaving hardware features behind, such as physical buttons, and are more devoted to software, because everything can be fixed with a software update.