More coverage of the ongoing Wi-Fi struggles of iPhone 3.0 users: In a discussion comment, Liam noted that he got full bars but no Internet using his iPhone 3GS until he turned off Bluetooth. After reading that, I wondered if Bluetooth is another suspect in the widening catalog of speed and signal problems reported with the iPhone 3GS and the iPhone 3G / iPod touch combination.
I ran the DSLReport speed test on my iPhone 3GS and found that with Wi-Fi and Bluetooth both enabled, latency increased a bit, and download speed decreased by over a third when compared to running the test with Bluetooth disabled. Upload speed didn't seem to be affected.
A possible reason was proposed by Doug Hogg of Toy Kite Software, creators of the Bluetooth-enabled two person game iSamurai: Real Life Sword Fight. Doug discovered problems in playing the game after updating to iPhone 3.0 software, but found that turning off either Bluetooth or Wi-Fi solved everything. It seems that both Bluetooth and Wi-Fi share the same antenna, so when Bluetooth was made active in the 3.0 software, conflicts arose.
On the Toy Kite Software site, Doug was a bit more specific. The iPhone 3.0 software brought with it a service discovery process that switches between looking for another device on Wi-Fi and Bluetooth using the single antenna. While searching, problems can occur with already established connections that can cause lags and loss of data packets sent between devices. Apple is working with Toy Kite Software to correct all this, but I wonder how much speed and even signal strength loss can be regained by turning off Bluetooth when it's not being used. In my case the difference was substantial.
It's also interesting to note that the iPhone 3GS uses a combination Wi-Fi / Bluetooth Broadcom chip that handles 802.11a/b/g as well as Bluetooth 2.1. Previously separate Wi-Fi and Bluetooth chips were used.
If you are having any speed or signal problems, try turning off Bluetooth and see what happens. I don't think that this will solve everything, but until Apple gets its act together on fixing all of this, what we're left with is a rag-tag assortment of tricks that may or may not help.
Let us know if this one works for you.