Although most readers have reported that iOS 4.0.1 simply modifies the display of signal bars (as intended), some have reported an increase in the incidence of dropped calls, particularly on iPhone 3G and iPhone 3GS models.
While the new update includes a modem software update (which theoretically could result in a change in actual signal strength in some areas), most of these problems are likely due to network settings issues or other temporary problems that occurred during the software update rather than due to the software update itself.
Fixes
In most cases, these issues can be resolved by following the 4 Rs:
1. Reboot (hard reset). Hold down the sleep/wake and home buttons simultaneously for roughly 15-20 seconds, until the screen powers off then an Apple logo appears, which signifies a reboot. Some problems may require (oddly) that this procedure is performed twice.
2. Reset all settings. The reset may restore disengaged hardware components and clear corrupt data that prevents proper connectivity. Navigate to Settings > General > Reset > Reset All Settings. Note that this will erase stored messages, passwords and other information.
3. Restore, but not from backup. It appears that bad holdover data from iPhone backups (especially those created for previous iPhone models) can cause various issues. Restoring as a new phone will delete contacts and other data, but may resolve the problem. To do so, connect your iPhone or iPod touch to your computer, click “Restore” in iTunes, then choose “setup as new phone.”
4. Reseat your SIM card. Simply remove your SIM card, clean it lightly using a dry cloth, ensure that there is no debris in the SIM slot, then reinsert the card, ensuring a snug fit. Instructions for doing so can be found in this Apple Knowledge Base article.
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