3.1.2 Update made things worse, final straw.

Question

After 4 days of perfect quality service, then 8 days of nothing but problem after problem, that's it, I lost it, this is a completely unacceptable level of service from both Apple and O2.
Battery life barely lasting a day, 3G signal constantly dropping no matter location (even sitting on the same park bench I could watch it cycle constantly and drop, watching my battery life draining away, wifi, push, etc all turned off)
O2 says "It's not us, your problem is with the iPhone"
Apple says "We wont even talk to you until 3pm" (Sure, saturdays are busy, I totally understand, but I am NOT waiting 5 hours to talk to a technical advisor, I dont care how trendy you think you are. (this was at 10 am this morning) )
So I marched right back into carphone warehouse, told the guy to skip the usual spiel and just cancel my contract. I was warned about going with O2 by friends but ignored them, stupidly, now i'm stuck with £20 worth of iPhone apps, and a £20 case that Carphone Warehouse would not refund.
I intend to take out an iPhone contract with Vodaphone in January (supposedly when they are releasing). I don't intend to try Orange, I have had a terrible experience with them in the past.
3.1.2 was the final straw, it's ridiculous that they had to release 2 updates within 2 weeks in the first place, let alone neither of them fixing any of the problems I was having, despite restoring the phone several times, cycling the battery, new sim, etc.
If the problems are with the phone itself, hardware or software, I can only hope that they fix it by January, whereas if the problem is with O2s network, then good riddance. What a complete bust.
Anyone who is thinking about taking out a contract, I advise you wait, anyone who still has the ability to cancel without incurring penalty I strongly urge you to do so.
Such a pity, the device itself was the best gadget I ever had, absolutely loved it, but it's a phone first and foremost and i'm certainly not paying £250 up front and £45/month for a phone that only works on GPRS, I can get that for £10/month and no upfront from Virgin (same minutes/texts).

Answer 1

I tried absolutely everything but thanks for the suggestions.
Went from 3.0 (phone came with)
To 3.1
Several Hard Resets and more than one restore (from backup)
Replaced the sim.
More hard resets.
Restore without backup (as new phone)
Perfect GPRS reception when I turned 3G off, but honestly, no way I was prepared to pay 45/month for that and hope that the problem was software and not the 3G chip. So I returned it already.
As for booking an appointment ahead of time, I already view Apple and the way they operate as pretentious and aloof, it's a SHOP, I should not need to book an appointment to walk into a shop and talk to an employee, that is not how shops work. I have a faulty product that needs to be replaced, I do not need to book an appointment to have a 'genius' ask me textbook questions before implying I must have tampered with the phone before reluctantly offering me an upgrade.
In any other store a normal sales clerk will do that without making me wait 5 hours, I just get in the queue.
Given the deadline for being locked into the contract was monday, I didnt want to risk waiting till saturday night for a new phone and being given just sunday to test it, because the first phone was fine for four days before giving me problems.
To axemandu:
I completely agree, whether the problem is with Apples software, the 3G chip Apple chose to use, or the service providers (or a combination of any of the three) the level of communication and service that a number (i'm not going to make any assumption as to how many, but more than enough to support 100+ page threads of complaints) of customers are recieving a level of service that is totally and utterly unacceptable and something needs to be done.
I was lucky that I could ditch my contract, others were not so lucky and those people are being left with a huge monthly cost for a phone that is essentially, broken 24/7.
I've never been Apples biggest fan, I had a rather dim view of them (and any company that hails the first iteration of a hardware product the way Apple does, first iterations always have problems which is why I waited for the 3Gs, assuming problems would be fixed by then) until I bought an iPod Classic, which has served me incredibly well for nearly 2 years now and is still performing amazingly.
To go from that to the problems i've had with the iPhone 3GS and O2 has destroyed my newfound confidence in Apple, I have returned to intensely disliking them and although I intend to take out a Vodafone iPhone contract, I only intend to do so in order to make use of the money that would be wasted on the case/apps/etc I bought for the iPhone. If that still does not function well in the grace period before being locked into the contract, I will not hesitate to switch to an Android powered phone or one of the new Nokias.