Apple's Watch is designed to be both fashionable and functional.
iPhone 4 In-Hand Signal Issue Isolated to Bottom Left Corner
The video shows that calls were consistently dropped when the iPhone 4 was held in the left hand while touching the bottom left corner.
It's not clear if the bottom-left sensitivity is a problem with every iPhone 4 or if there is only a batch of iPhone 4s that are affected. Of course, the solution for now would be to avoid holding the iPhone in the manner demonstrated.
Note: the lower number of bars on the iPhone 4 as compared to the 3GS is a known software issue. Apple told Mossberg that it would be addressed in a future software update.
Update: A couple of commenters have said they have been unable to replicate on their iPhone 4, while others have, so it may not affect every device.