Apple's Watch is designed to be both fashionable and functional.
Other Mobile Phones with Similar Signal Loss Issues
If you go to Settings -> About Phone -> Status you will see a display for "Signal strength". When my phone is sitting on the desk, the signal stays consistent. However, the second I touch my phone, the signal drops up to as much as -20 dBm. I am able to replicate this test every single time, whether the signal is incredibly strong or weak.Another user filmed this video of his Nokia 6230 showing the same phenomenon:
Apple's official response is that this is "normal" for any mobile phone:
Gripping any phone will result in some attenuation of its antenna performance, with certain places being worse than others depending on the placement of the antennas. This is a fact of life for every wireless phone. If you ever experience this on your iPhone 4, avoid gripping it in the lower left corner in a way that covers both sides of the black strip in the metal band, or simply use one of many available cases.
Obviously, depending on your natural hand position while using the iPhone this may or may not be easily avoidable. Also it seems the issue may be more severe on the iPhone 4 with dropped calls. Besides a case, another simple solution that has been said to work is placing some sort of tape on the bottom portion of the iPhone 4's antenna which should prevent the antenna bridging when holding the phone.