I dropped it thrice in a month recently (ouch!) (this was in addition to dropping it in water...) - and had no-signal to one-bar...
-- The first time, I tapped it in anger at various parts - and hey presto, the signal came back full strength!
-- The second time I took it to the repair shop as no amount of tapping made any difference. The shop said they do not repair the 3GS as repair costs are more than a new phone...I begged them to take a look, they agreed...and when I came back in one hour, the young guy behind the counter said he had "reset the signal; only took him 30s" and it was back in business. As usual, I did not ask him what he had done...
-- The third time - almost too ashamed to take it to the shop again - I tried resetting signal -
>> toggle airplane Mode
>> Settings -> General -> Cellular (toggle)
>> Power on/Off
>> SIM remove/re-seat
- but no effect
So I took it to the shop again and another person behind the counter. "What is it," he asked me when I showed the phone. "A 3GS," I answered. All round laughter in shop...
I asked him to "reset the signal." He said "I don't know how to reset the signal; how do you do it?"
Finally he took it from me, opened the power-connector end (2 screws), poked around, muttered something ("Doesn't even have <something>," pushed something down and closed the cover again.
One bar...
My heart sank...
But I software reset it myself then (see steps above) - and this time after reboot the phone came back will full signal strength.
No charge for the repair - "I only remove two screws and plug it back in," the technician said. I did not ask him what he "plugged back in..." - but am all set now - till I drop it again...
so it seems to need both a SW and a HW nudge...