Here's another data point: I have an iPhone 3G (not 3GS). It worked fine when on the ground, but whenever I was high above the ground, such as in a tall building, I would have problems such as dropped calls, unintelligible voice path, data service that would cut in and out, and signal that would intermittently go from 5 bars to 1 or 0 bars for a minute or so, then reset. I associated this with the problems relating to multi-path from nearby tall buildings and/or the phone "seeing" a signal at the same frequency from several cells over.

When the 3.0 software came out, I updated my iPhone 3G, and all of these problems went away. I infer from this that there was a major update to the radio firmware in the 3.0 software release, and in my case, it made all of my problems go away. I suppose it's possible that these changes had a negative affect on other users based on conditions specific to their location and/or local system.