OMG!!. Changing wrists worked 100% for me.
As many have posted when walking/runnig I did have continual cutouts of the music for very short periods.
And after a little testing ,I think I can explain why swapping hands worked...
-The aerial for my Bluetooth headphones is right next to my right ear.
-The transmitter on my watch is on my left wrist.
-When running and my left arm is back the radio waves (which travel in a straight line) need to pass right through my body and head to reach the receiver in the right headphone!!
-But moving the watch to my right wrist, then the radio waves have almost direct line of sight to my right ear.
-When wearing the watch on either wrist, if I put my hand behind my back and hold it tight against the small of my back the bluetooth audio cuts out again (as the radio waves need to travel through my body again).
So I summerise that the Bluetooth transmitter in the iPhone is quite weak, it can transmit OK for line of sight (I get about 10 steps away before my starts to cut out), but when transmitting through objects it cant go far at all!!
So if anyone reading this is looking to buy new bluetooth headphones you may like to consider which hand you wear your watch on and buy headphones with the receiver on the same side (I guess the receiver would usually be in the same side as the charging port??).
I would also therefore expect that some headphones may work better than others...headphones with stronger receivers may work better.