Network signal predominantly: 'Searching...'

My iPhone is a 3GS that's been upgraded to IOS 5.0.1 on November 19th last.
Yesterday I found out how to enable the new integrated Twitter functionality.
I don't know if they are related but my phone has difficulty staying connected with the O2 network. When it does manage to connect the little network connected icon stays at 5 bars (i.e. full strenght) then drops to one bar after about 30 seconds and and reverts back to 'Searching...' message it stays in this state for over 2 minutes before going into the same sequence again. During this time I am unable to make or receive calls or send ot recieve texts (with the exception of iMessages which are transmitted over WiFi).
I contacted O2 to see if there was a local network fault for example a network cell down. There was no reported incident. Also all other phones on the O2 network are working without a problem.
I have on the suggestion of a friendly Apple Service operator replace the SIM card as it was thought that it might have failed. This is have done without any noticable change in the problem, hence the possibility of a faulty SIM is eliminated.
I have tried resetting network connections i.e. Go to Settings>General>Reset>Reset Network Connections. This has not made any difference to the problem.
In its present state the phone is unusable.
I would welcome any suggestion that I might try as my telephone support as expired.
Regards,
Ciaran

I have this problem too. Phone can't latch to signal while other phones can so I tried restoring my phone. It failed because of unresponsive firmware.
I was able to restore back to 7.1.2 after the phone went fully discharged (I suspect the firmware was reset during the discharge). I got cell service back but after 1 hour, went back to searching. Restored and failed again.
What I learned from this encounter:
If your phone has charge, restore tries will fail since there is power supplied to the baseband/firmware.
Let your phone discharge and charge again to revive the firmware and make the restore push through.
The final nail to the coffin though is when my last restore effort took a toll on the charging mechanism. I left the phone to discharge for my next restore effort but when I plug it in, its direct to an apple logo and then connect to iTunes logo. When I unplug it, the phone immediately turns off (which means the battery is not holding any charge thus DFU and Restore mode technically won't work). I left the phone overnight with no dice. I feel bad because the phone is less than 2 years and is in good condition.
Usually a discharged phone will show a low battery and turns on after 10-20 minutes.

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