Update: I’m still having these issues….
Several weeks ago, after upgrading to release 2.2.1 of the iPhone OS, and also installing the AT&T network update that came right after, I started having issues with data connectivity problems on the 3G network. My phone, which normally gets a very fast and very stable 3G connection at my office, started having problems maintaining a 3G connection even while the phone would be sitting on my desk. Consistently I would have a 3G indicator with 5 bars for the signal strength but as soon as I started accessing the Internet, whether via Safari, Pandora, or any other application, the phone would drop to EDGE mode. As soon as the network activity stopped the indicator would switch back to indicating 3G. This happened consistently every time I attemped to access the Internet.
After about two weeks of this I was going crazy and downgraded my phone to the 2.2 OS revision (this was an adventure in and of itself) because the phone had worked perfectly with that release. And according to the various forums, etc. I searched the network update was only simple changes to icons, etc. that AT&T sent. Well, 2.2 worked perfectly, no more network problems. But I found out one of my applications, which had just been updated recently (Ambiance) required version 2.2.1 of the OS so eventually I reupgraded the phone. This time however I didn’t apply the network update from AT&T when I was nagged about it.
The phone worked perfectly with 2.2.1. Again no network/data connectivity problems. I then decided just a few days ago to reapply the network update and lo and behold I started having connectivity problems again.. After a few days of this I hopped on to the AT&T website and chatted with a customer support person. There were no indications of problems with any towers in my area and the only thing the agent could do was suggest to me to reset my network settings. I didn’t know that option was even there before so I figured I’d give it a shot.
I was completely surprised to find that my network connectivity problems had disappeared! I lost my WiFi settings but I can deal with that if I can get a solid 3G setup again. So far so good. I’ve been getting consistent, fast, 3G performance as I was before. I’m not quite sure what the network reset does aside from removing WiFi settings but it seems to have worked.
Here is the document from AT&T: Reset Network Settings