iOS 4 vs. iOS 4.0.1 (and iOS 4.1) signal mapping changes
Anandtech compared the differences in signal mapping between iOS 4 and iOS 4.0.1 (and iOS 4.1) and concluded that Apple has indeed produced a much more reliable system (meaning the old system was less than honestly reporting strength):
As you can see the old way (top) put far too much weight into the 5th bar of signal. Apple's new approach not only splits it up more reasonably between the 4th and 5th bar (still non-linearly keeping you in the 5th bar if possible) but also extends the range of the lower bars.
[...] The result is that most iPhone users will see fewer bars disappear when they hold the iPhone 4 in a bare hand. The side effect is that the iPhone now displays fewer bars in most places, and users that haven’t been reporting signal in dBm will time see the - perhaps a bit shocking - reality of locations previously denoted as having excellent signal.
That was my experience as well -- even with iPhone 3GS.
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