Dunno the technicalities but from what I understand, placing your hand over an antenna (not necessarily touching it) will alter the signal field around the phone. So the iPhone would then attempt to choose a better frequency to alleviate the loss of signal. But somewhere in that code, it messes up, losing reception.
Pretty good summary. A lot of you guys are tricked into associating touching with a response, just like on the iPhone's screen where you touch something and you get a response, but in this case, the touching isn't what is causing the problem, it's the interference. When you put your hand around the phone like that, it supposedly causes the phone to have to switch frequencies or something in order to retain the signal, and THAT'S what's supposedly failing, which is why it ends up losing the signal.
So it isn't that the issue is 'touch here and boom there goes the signal', it's not like a button, rather it's that the hand placed in that proximity is causing interference with the signal. Something that would have otherwise not mattered and would've been handled correctly by previous firmware versions, but now is not due to a bug that creeped in when the engineers devised a new, supposedly better, way of choosing signals. Perhaps this new way of choosing signals is indeed better, the point is that this bug is preventing us from knowing that. Once this is resolved I'm sure we can all expect to see the purported better reception, etc. Something like this would definitely be easily fixable by a firmware update, since that's where the issue supposedly lies, in the firmware.
It isn't the first time a firmware update has fixed signal issues.
For proof, go to wikipedia's page for the history of iOS firmware versions:
http://en.wikipedia.org/wiki/IOS_version_history
Specifically, look at version 2.1 "Improved accuracy of the 3G signal strength display." (not as related to this issue) and version 3.0.1 "Improves reception"
I have this reception problem too. I am not ruling any possibility out, but I would also like to hope for the best, and being a software developer myself I can see how this (it being a software bug) is a possibility.
And do those saying that this is not the same thing because it does not ultimately end up with 'no service' or 'searching...', this does not matter. Not everyone who has this reception problem has has their bars turn into the 'searching...' text. Some people have, but for example, not me. I do have the issue and the bars disappear quite fast, but it does not ultimately say 'Searching...' or 'Not Connected', and I've been testing this many times during the day to see if it somehow fixes itself (which I now doubt).