My fiance and I went to the Apple store this past Friday and had her iPhone 3G replaced with a new one for an unrelated hardware issue. The iPhone 3G that she recieved came with 4.0.1 installed. We live in a suburban area that normally has good service; the 3G service is spotty where her house is, but with my iPhone 4, her old 3G on 3.1.3, and my old iPhone 3G before my upgrade, we would get 3-4 bars of Edge service. We noticed the night that her phone was replaced that initially it had 3-4 bars of service with Edge data, but then after about a half hour of standby or a few minuted of actually using the phone, it would display "searching..." then switch to "No Service". I tried making phone calls to and from it, to see if it actually didn't have service or if it was just an issue with they way the software displayed the signal strength: calls going out failed immediately and calls incoming went straight to voicemail, so it definitely had no service. Meanwhile, my iPhone 4 with 4.1 on it had 4 bars of edge service, right next to it. If the network settings were reset or the phone was put through a hard restart, the service would reappear temporarily, but then go to no service. Yesterday I upgraded it to 4.1 hoping that it would fix the issue, and at first it helped, but like before, it went to no service. Finally to see if it was an iOS 4 issue, I downgraded the iPhone 3G to 3.1.3, but even with that the phone had no service at all. The wifi works, but no cellular signal was picked up. At this point I am led to believe that the problem is one of two things: either a hardware issue with the replacement phone she received on Friday, or more likely, a software issue. Since the issue was present with iOS 4.0.1, 4.1, and 3.1.3, I'm lead to believe that it is an issue with the cellular radio firmware, or the AT&T carrier software that is causing the issues with the iPhone 3G service. In either case, she is left with a useless cellphone at home, and there doesn't seem to be any way that Apple can fix it, other than more software updates that we'll have to wait for, or if we cna somehow get an upgrade to at least a 3GS or 4. Very disappointing and frustrating. I have seen other reports of people having service issues after the 4.0 or 4.1 upgrade, but wasn't sure if any one was successfully getting it fixed.