Apple has published a letter regarding the antenna issues experienced by iPhone 4 owners.
From the letter:
Upon investigation, we were stunned to find that the formula we use to calculate how many bars of signal strength to display is totally wrong. Our formula, in many instances, mistakenly displays 2 more bars than it should for a given signal strength. For example, we sometimes display 4 bars when we should be displaying as few as 2 bars. Users observing a drop of several bars when they grip their iPhone in a certain way are most likely in an area with very weak signal strength, but they don’t know it because we are erroneously displaying 4 or 5 bars. Their big drop in bars is because their high bars were never real in the first place.
It’s pretty amazing to see a company this high profile admitting to this. They realized that they were showing too many bars to begin with and will release an update to address the issue.
The truth is that most users will never see this problem with regular use, but for those who do, Apple will alleviate the problem as best they can with software updates.