Reports are proliferating from iPhone users experiencing more dropped calls since they updated to the 1.1.3 firmware. Signal strength mysteriously drops from five bars to none in an instant, then just as mysteriously returns to full strength when you end the call.
Suggested fixes include several varieties of reset/restore, jiggling the SIM card, tin-foil beanies or saying the hell with it and demanding a replacement handset.
Increase in dropped phone calls with iPhone software 1.1.3 [iPhone Atlas]