Consumer Reports has just weighed in on the iPhone 4 reception problem and they definitely disagree with Steve Jobs. Consumer Reports tested three iPhone 4's and other AT&T phones and found that the iPhone 4 was the only handset with signal loss issues. The tests were run in their RF isolation chamber which allows them to simulate various levels of signals.

Consumer Reports said:

"Our findings call into question the recent claim by Apple that the iPhone 4’s signal-strength issues were largely an optical illusion caused by faulty software that “mistakenly displays 2 more bars than it should for a given signal strength.”
The tests also indicate that AT&T’s network might not be the primary suspect in the iPhone 4’s much-reported signal woes."

Consumer Reports praised the iPhone 4's display and video camera, but went on to says they "simply can't recommend the device until Apple comes up with a permanent and free fix to the antenna problem."

This report certainly brings validity to the complaints by users of the iPhone 4's reception. Steve Jobs was famously quoted as emailing a customer complaint by saying, "there is no reception issue. Stay tuned." It looks like Consumer Reports begs to differ. Stay tuned...