Software absolutely CAN solve hardware problems, in many cases. In fact the software is completely written to work with hardware design, and software can be adjusted to better perform with any given hardware. This is absolutely true 100% of the time. Software and Hardware work together.
It remains to be seen whether or not software will FIX this particular problem. But at a bare minimum, software WILL be able to reduce the impact of the problem - and that may be enough to make it a non issue.
The entire signal process is digital, and is controlled by software. That software can be adjusted to match what is happening with the hardware. The iPhone 4 radio software is doing several new things which have not been done before. How and what they are doing will be tweaked as Apple learns more about the phone's real-world performance.
Will a software fix completely get rid of the problem? While that is possible, I seriously doubt that in this case software will completely solve the problem. But I do believe that software will mitigate the issue to where it is almost non-existent.
Apple changing the signal display has nothing to do with the real signal problem - but will help people better understand what is really happening with their signal. But I think if *all* they were doing was adjusting the way the bars are calculated, they would have had the patch out already. I think the fact that it is taking longer to get a patch out implies that they are working on more in-depth software adjustments that they are not going to release in a press statement or tell AppleCare to get chatty about.
Software will improve the situation.
I find it funny that people think Apple is doing nothing about this. They probably have had people working 20 hour days on this problem since June 22nd when it was first exposed - probably earlier in fact. Do you people think the Apple iPhone engineers just sit around and count money all day? They are real engineers who take pride in their work and work very hard to make good products.
You make a phone that does what the iPhone does and sell it to 2 million people in a weekend and see if it is completely bug free on the first shot!
This whole thing is *exactly* why companies make software up-datable!