This is the proper way of holding the phone according to Steve Jobs:

Moral of the story: Try to refrain from purchasing a consumer electronic device when it is first released. Wait at least a few months when the bugs and glitches are well known and being eliminated.

I will never understand why people buy the crappy iPhone when there are much better smart phones in the market.

This thread will answer your questions

http://gamrconnect.vgchartz.com/thread.php?id=112489&page=1&str=1159885064#

How is a person supposed to hold it, then? I love Apple, but this is an epic fail. Hopefully it can be fixed with a software patch.

I have an iPhone 4, and it does this somewhat.

Yes, I see the bars change, but I have yet to have it effect me in any way. I don't pay attention to how I hold the phone, and it has never dropped a call of lost signal.

So, it's a flaw, but one that doesn't effect me.