As promised, the new iPhone system update corrects the bar signal display. Also as promised, it provides another "enhancement": Taller signal bars! Free tip: If you paint flames on the back of your iPhone 4, it runs 2.3x faster.
Apple claims that the iPhone 4 reception problem doesn't exist. They say that the "dramatic drop in [signal] bars" is explained by an erroneous signal display. However, they don't address the data and voice degradation caused by their design. Updated.