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Apple has integrated the UMTS, GSM, GPS, Wi-Fi, and Bluetooth antennas into the stainless steel inner frame.
The dual purpose stainless steel inner frame/antenna assembly addresses possibly the two biggest flaws concerning previous iterations of the iPhone: continuous dropped calls and lack of reception.
Apple has gone a step further and tuned the phone to utilize whichever network band is less congested or has the least interference for the best signal quality, regardless of the actual signal strength. Early reports suggest this feature, while buggy in its early stages, will greatly improve the phone's reliability on AT&T's fragile network.