I have a similar problem with my 3G phone, WI-FI comes and goes, but has nothing to do with the new IOS Upgrade (4.2.1)the root of this problem is from before, I understand it is apple's software that causes this problem, I had 3.1.2 when started doing this, I thought that upgrading to 4.0 will fix it (when it came out) but no luck there, right now is working after I did a restore on Iphone, and is been working fine using 4.2.1, I do NOT Sync iphone with Itunes, I use Itunes to Backup my phone only, my apps update are done separately (Iphone/Itunes) don't sync anymore, this works for me.