It seems to have been confirmed that there is something wrong with the iPhone 3g's chip/software causing bad service. According to sources at Business Week all of the iPhone reception problems are caused by the iPhone's Infineon chip as Nomura Securities analyst Richard Windsor already suggested.
The good news? Apple believes that the problem can be fixed with a simple software update. Apple and Infineon (the chip maker) are working together testing software tweaks and updates to fix reception problems. When should we expect our reception woes to be sorted? As early as the end of the month.
[via business week & cnet]