I just purchased an iPhone 7 Plus just over a month ago. I got the watch a couple weeks ago. The first watch lost connection, the time was moving faster (was 5 min ahead of phone when I noticed, by the time I got to the store it was 3 hours ahead of the phone) and the screen wouldn't respond to touch. The store shipped the watch to Apple and they sent me a new one.
I paired it with my phone and all was good. For about 48 hours. Then it lost connection again. Back and forth with support for over a day and they were going to escalate the problem to a higher level. In the meantime, I tried EVERY step possible short of wiping my phone (There's a lot I rely on and I'm trying to avoid a wipe). I've rebooted both devices, reset settings on phone, reset bluetooth, tried On and Off WiFi, power cycles, you name it. I reset the watch to factory, unpaired from the phone AND removed it from my account. I couldn't get it to pair back to the phone no matter what, repeating all steps above (Aside from Reset Settings on iPhone). One tech I spoke to said they heard of this issue with a corrupt contact in the phone. Since I use Google Contacts mostly, I disabled iCloud (I copied my contact data just in case to iCloud when I set up the phone). After doing that, boom. The watch was seen by the phone and I could pair it. I got excited. I made sure to pair the watch as new and not to restore from a backup and also to not install apps, just whatever Apple apps are on the phone itself.
Till now, 48 hours later again the same exact thing. Now I'm thinking it's something with the phone. Apple has run diagnostics (through chat support via WiFi) and said all hardware looks ok. But now I'm wondering if my bluetooth is shot, if something is corrupt on my phone? I don't know. I've done two iOS updates since I've had the watch, I've even updated the watch to WatchOS 3.1, phone is now on iOS 10.1.1, plenty of space on the phone. I've just updated the tech to the issues I just faces, a link to this thread and I'm hoping to hear back from him soon.
Recap: Watch disconnected from phone after 48 hours, time on the watch moving faster than phone (Now 28 minutes faster than phone), it's connected to WiFi (Cloud Icon) and I get iMessages on it, it also keeps asking me to enter my passcode whenever I tilt my wrist, like it doesn't know it's on my wrist as it's supposed to.
I'd love to sit with a higher up tech and figure out what this issue is, I want this to work I really do. I just ditched all of my Android gear and moved to Apple, this isn't helping.