Physics 101 time:
The reason you got no signal underwater is actually fairly complicated. See
here for a great explanation, but here's the cliff notes version:
- The conductivity of water is huge. This means that the signal attenuation per unit length is also huge. Using the equation supplied on that page (alpha=0.0173*sqrt(f*sigma)), the attenuation of fresh water (sigma=0.0546) at 1900 MHz (common AT&T band) is 176 dB/meter. Considering the minimum signal strength required for the iPhone 4 is -121 dB, this means that even if you had a cell site just above the water level, you wouldn't come close to getting a signal one meter down. Note that conductivity has NOTHING to do with density, it's an intrinsic material property (more or less).
- Less importantly, there are significant refractive losses at the surface of the water due to the change in the index of refraction between the two materials...basically due to the change of the speed of light between air and water. You know how when you're underwater and you look straight up, you can see out of the pool, but if you look at a 45ish degree angle, the surface of the water looks like a mirror? Exact same thing.
- Finally, because of the change of refractive index, the wavelength of the radio signals change. This basically screws up how the antenna works. The antenna is tuned for a specific wavelength of light; by putting it underwater, it's now no longer tuned for the right wavelength. Note that this could be mitigated by the fact that the iphone isn't actually directly in the water, but in an air bubble which is in the water...the effect should be more or less 100% reversed when the signals pass back into the air in the bag.
Also, the reason you can't press anything is because the bag is electrically insulating, shielding the phone's screen from the capacitance changes due to the presence of your finger.