Apple has just issued the 4.0.1 iOS update, which includes a new formula for displaying reception bars.
The update includes a new signal strength algorithm, which is Apple’s answer to the iPhone 4 death grip issue. It doesn’t appear to improve reception strength, just the way it is displayed. According to Apple, the iOS used an old, outdated algorithm that incorrectly calculated signal strength, a problem that was exacerbated when user’s cover the external antenna.
The update fixes this problem, and is available for iPhone 4, iPhone 3GS, and iPhone 3G. It can be downloaded through iTunes when the device is connected via USB. (Hit the “Check for Updates” button).
The update can also be downloaded here: