I think you're getting confused in between 'antenna gate' and poor reception in general.
With the antenna problem (antenna gate) that made big media news, the antenna is the metal trim ring that wraps around the outer edge of the phone. The way antennas work (well) is by being some multiple (or fraction) of the wavelength of the transmitting frequency. This helps due to the phenomenon called resonance. So basically the antenna needs to be a specific length, or many different specific lengths that are multiples or fractions of the wavelength. Because of this the antenna is not solid around the outside of the phone. There is a break in the antenna. When you bridge this gap with some part of your body, like your finger or hand being put around the phone, it shorts out the antenna and you get no reception.
This is more generalities because I don't know anything specifically about what they changed with iOS 4.2 that supposedly helps the reception. There is the issue of deciphering what's coming into the antenna. Your phone doesn't just receive a signal of someone talking. It receives some digital, compressed, modulated signal. So there is hardware and software on your phone to turn that into someone talking to you. The issue is when the signals get really small, what's noise and what's the signal? It's like trying to listen to someone talk across 270 during rush hour. So if you can tweak something here and there to filter out more of that noise you can get better reception, especially at low signal levels.