AT&T's reception problems seem to be mostly concentrated in a few large cities -- most notably NY and SV/San Fransisco.
I'm a longtime AT&T customer and recent iPhone owner. I've lived in Milwaukee and Phoenix, and their reception is on par with the other carriers in those cities. NY and SV are, in my opinion, the last places you'd want poor service (because it will be discussed nationwide), but I don't think that their reception is so terrible generally nationwide.
I agree that their customer service is pretty lackluster -- then again, I've heard plenty of Verizon customer service horror stories.
(Please chime if you're in another city and have unusual reception woes, my limited experience is not necessarily representative)