Phone signal drops and says 'searching...' no idea what to do

Half way through calls or after calls the phone signal drops and i can't get it back unless i switch on and off numerous times. THis has been gong on to a greater or lesser degree since I got the phone a year ago but has got much worse recently.
i have tried resetting all settings, as per the o2 advice. They have told me to go to the apple store but I am not hopeful that they will help and as it is a long way I don't want a wasted journey. I have swapped sims/ phones with my partner who has a 3g iphone and he doesnt have the same problem so it is not related to where i am geographically or my sim. any ideas?

I have the same problem after I have update my iPhone 3G to iOS 4.1.
Immediately after the update my simcard was demagnetized (it was unusable). So I had to buy a new sim card but after a couple of day more times a day the sigal drops down and I have to switch off/on.
My iphone has never had any problems untill the update.
My operator is Vodafone Italia.

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