A number of users have experienced an issue in which the iPhone 4 unexpectedly mutes a call, hangs up or engages FaceTime when the device is held up to the ear. This problem occurs due to apparent under-sensitivity of the iPhone 4′s proximity sensor, which turns off the screen (and touch capabilities) when the phone is held to the ear. In other words, the proximity sensor does not properly engage, and the user’s cheek or ear accidentally touches the mute button or other functions.
In other cases, it appears that the proximity sensor is not engaging at all, leaving the screen on and touchable while the iPhone 4 is held to the ear.
Reset all settings. Although this will not help with an under-sensitive proximity sensor, it may help when the proximity sensor does not engage at all. It appears that the reset may restore a disengaged sensor. Navigate to Settings > General > Reset > Reset All Settings. Note that this will erase stored messages, passwords and other information.
Restore, but not from backup. It appears that bad holdover data from iPhone backups can cause this problem in some cases. Restoring as a new phone will delete contacts and other data, but may resolve this issue. To do so, connect your iPhone or iPod touch to your computer, click “Restore” in iTunes, then choose “setup as new phone.”
Remove case. Some users have reported that removing cases (especially those that were designed for previous iPhones but fit on the new iPhone 4) can mitigate this issue.
Launch another app. Albeit kludgy, you can open another app after you’ve made a phone call to obviate this issue. Right after making or receiving a phone call, press the home button then launch an innocuous app (such as the calculator app) that won’t invoke any unwanted functions if accidentally tapped.