It seems that a problem is being reported on the Internet about bluetooth not working properly on the new iPhone Firmware 1.1.4. Users are reporting that Bluetooth does not work at all on their iPhone, but luckily iPhoneAtlas has come through with a quick-fix that seems to be working for most of these cases. If you are experiencing any bluetooth issues after updating to firmware 1.1.4 go ahead and follow the iPhoneAtlas step by step below:
Toggling Airplane Mode on and off. To do this, turn Bluetooth off, then navigate to Settings, then slide Airplane Mode to On, wait a few seconds, then slide it back to Off. It seems that discontinuing and restarting the EDGE and WiFi components in the iPhone can restore connectivity.
Go ahead and chime back so we can get an idea about how widespread this problem has become.
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My Bluetooth worked just fine prior to 1.1.4 but now its range is very limited and the reception is poor.