Before I got my iPhone (1st Gen), I was a happy Verizon user. In the Washington, DC area, Verizon is king. The signal is excellent and for years they have had an exclusive with our subway system, with underground "towers" enabling Verizon users to use their phones just about anywhere. Their signal is also better able to penetrate buildings.
The only hesitation I had about the iPhone was having to switch to AT&T. I knew their network was not as good. But I really wanted the iPhone. So I took the plunge. And I quickly saw the difference. If I was on the subway - no signal. If I was not by a window at work - no signal. If I was in the parking garage downstairs - no signal. And even if I was driving on the highway, I had a weak signal. It didn't seem to like me moving.
That being said, I have noticed that things have been improving slightly. I'm getting a better signal on the main highway I use and it seems like my signal is penetrating into my building at work a little better. I'm curious to see if when I get the 3GS phone if the signal improves even more.
And then, to confirm what I had been experiencing, I recently got an email from AT&T where they were announcing the improvements they've been making to the signal in my area, actually specifying the highway I use and mentioning that they will be bringing AT&T to our subway system (yeah!!). And for once, I believe their marketing - I have seen the improvements.
I would still rather have Verizon as my provider, but AT&T appears to be getting better. I don't know where you live, but perhaps in time things will improve on your end as well. If signal strength is just too much of a problem for you, you should consider finding another provider and give up the iPhone. It's possible one of the other companies is the king of your area. Ask your friends - see which providers they have - invite them over to see how their phones work in your home. Cell phone networks are different - some are better than others and it appears to be dependent on location.